We have a financial system inquiry that could provide a major rethink of the problematic superannuation system, but instead looks set to either ignore it or preserve the status quo, writes Ian Verrender.

Ask any lawyer and they'll tell you the golden rule in court is to never embark upon a series of questions to which you don't already know the answer.

It is a philosophy that has been warmly embraced by business. Managers these days never make decisions without "expert advice" from consultants who, by definition, know less than the managers actually running the business and who glean all their data (and recommendations) from the managers.

When it comes to government, the trick is to call for a wide-ranging inquiry, preferably one that does not have legal standing, and stack it with a bunch of high profile appointees whose integrity is beyond question but whose thoughts are well known.

In a perfect world, last week's Commission of Audit on government spending and the Financial System Inquiry under wayshould provide the perfect intersection for a rethink on how to cope with the challenges that lay ahead for an economy facing a sharp lift in pension and superannuation payouts.

But the entire affair is shaping up to be a spectacular no-show. Instead of targeting changes to ensure efficiency and equity, the end result of this unique combination of inquiries is likely to reinforce the status quo.

Where former Business Council boss Tony Shepherd focussed on how best to restrict payments to pensioners, the banking inquiry's big kahuna, David Murray, will most likely hone in on how best to preserve the financial services industry's obscene gouge on the superannuation system, or simply ignore it altogether.

Realising the looming problem for the public purse, Paul Keating established the compulsory superannuation system more than 20 years ago as an adjunct to the aged pension.

What he didn't foresee was the extent to which his grand vision would be plundered by an industry that continues to enrich itself at the expense of those it was meant to serve.

At the time, Keating was convinced the private sector was the most efficient way to manage the retirement savings of ordinary Australians.

Ironically, that view wasn't shared by John Howard and Peter Costello, staunch advocates of small government, when they established a centralised, government sanctioned super scheme for public servants, the Future Fund.

With the benefit of hindsight, Costello got it right. Where the Future Fund invests with long-term horizons, in areas such as infrastructure and alternative investments, most Australians find their savings at the whim of the stock market, in the hands of managers intent on maximising their own benefits.

Last year, $23.6 billion was syphoned out of the compulsory super system in fees. The year before, it was $19 billion. Given the superannuation pool grew by $300 billion, that's an extraordinary fee grab, particularly given the pot grew through no efforts at all of those "managing" the money.

In a recent report, the Grattan Institute estimated Australians were paying double what they should be. Titled "The $10 billion Super Sting", the report pointed out that fees should have fallen, in percentage terms, as the super pot swelled and the industry gained scale.

The reason they haven't is that funds managers charge a fee on the amount of cash under management, not on performance. If markets rise, they make a fat fee. If markets fall, their fees remain fat. And every week, working Australians tip 9 per cent of their salary into that ever expanding pot.

That's the primary reason the financial services industry has pushed so hard for the Coalition to change the Future of Financial Advice legislation.

Subtract the stonking great fees, and retirees end up with a lump sum significantly less than if their cash had been invested by a computerised index trader - where money is allocated equally across markets at minimal cost.

The problem for Murray is that wealth management is significant money spinner for banks. Take his former bank as an example. The Commonwealth picked up a tidy $395 million in the six months to December from wealth management.

Given his former position as the founding head of the Future Fund, Murray is in a somewhat delicate position.

Older Australians face a bleak future. And the less wealthy you are, the bleaker it looks.

The incoming government removed the co-payment on superannuation for low income earners, a policy the previous government instituted to encourage low income earners to save.

Removing that co-payment results in low income earners being penalised if they opt to invest in superannuation whereas rich Australians are rewarded.

How? It works like this. Earn less than $18,200, you pay no tax. But if you want to put some of that tax free income into a fund to provide for the long term, you will be slugged 15 per cent tax.

Between $18,200 and $37,000, you pay 19 per cent tax. If you stick some of that in a fund, you only pay 15 per cent tax. So effectively you get a 4 per cent tax benefit.

But go to the upper pay levels and the story is vastly different. For every dollar you earn over $180,000, you pay 45 per cent tax. So there is a good incentive to stow some of that cash in super at 15 per cent tax, as it delivers you a 30 per cent tax concession.

Removing this bias could save Joe Hockey a tidy sum in this month's much anticipated frugal budget and provide some equity in the system.

And if David Murray could curb the excesses of the banks, superannuation earnings would be vastly improved, thereby reducing pressure on the government to provide pensions. What a neat solution.

Back when he was opposition Treasury spokesman, a tub thumping Hockey raged against the greed of the banks, at how they were ripping off ordinary Australians. He had a nine point plan to curb their power. And he promised when he came to power that he would order an inquiry into the system.

Here it is. Let's see if David Murray delivers.

Ian Verrender is the ABC's business editor. View his full profile here.

I think I think:

05 May 2014 8:55:25am

Are you truly unsure what they will do, yank? These "hard working contributors" that the "grown ups" bow to are ruling the roost. Conmen, skimmers and thieves - they are making the easiest bucks on our compulsory savings. They wont give that up easily and you can suffer in your jocks in old age as your pension options are reduced and aged health care is slashed. It is a bleak future for a lot of oldies...

JohnC:

05 May 2014 9:25:54am

@I think I think:The real "hard working contributors" were at it again today with the Treasurers announcement to the mining industry that there will be no adjustment to the diesel fuel rebate in the upcoming budget. Makes the power of other lobby groups in all facets of our society look like small change. The rebate is estimated to worth @2.5 billion.

mick:

05 May 2014 10:20:02am

The problem, John, is the left see that anytime government gives money to people it doesn't particularly like as a problem. Instead of returning money paid by the mining and agricultural industry, it should never be collected, then of course we'd save on the bureaucracy as well.

However, giving money to arts grants, film funding, book awards, festivals, or people they do like, is evidently OK.

The usual double standards based on which side you barrack for, not on principle.

WA Ideas:

JohnC:

05 May 2014 10:30:46am

@John:Technically right of course. Thank god the "powers that be" have also taken their foot of the pedal on such an imposition on the big miners as the MRRT. Let's cut to the chase and repeal not only the MRRT but also those pesky royalties implemented by the States. We are after all a nation of the fair go, so its only fair that the nations finite resources should rightly be a benefit for the needy Gnomes of Zurich rather than our own prosperous citizenry. What a beat up about agriculture. Surely our brains trust could devise the rebate so that the farmers don't benefit from it and only the mining industry are recipients. Pretty simple really.

Magpie:

05 May 2014 10:36:21am

Ban the miners from using roads or other public transport infrastructure. See how long they last. How did they even get the fuel to the site? Magic?

The tax from fuel does not get spent on roads, anyway. It goes into consolidated revenue, same as every other tax. It then gets spent on whatever a government wants, same as every other tax. Sometimes it gets spent on, oh, say port facilities and rail.

If you exempt an industry from a tax, and give them a competitive advantage over other industries in Australia who might be competing for the same people and resources, you need to have a reason. Same as ALL welfare. You do not give it, unless you have a reason.

The fledgling mining industry was given assistance. Good! It needed it, and that assistance paid off. Now they do not need assistance. So stop providing it. Simple.

Tator:

05 May 2014 11:08:00am

Miners aren't the only ones eligible for the fuel tax rebate.Farmers, railway operators, marine diesels, stationary power generators all get it too. BTW, the truck that delivers the off road diesel would be getting a discounted rate and not the full rebate.

RayS:

05 May 2014 2:24:45pm

If a budget surplus is necessary then an effective tax on mining and an effective tax on the banks is the only possible way to do it.

The mining tax should be hard to avoid, probably through a price per tonne of ore extracted for all minerals. Why do we give away our mineral wealth to foreign or global companies which have corrupt connections to and influence over politicians?

The bank tax could be a percentage of the amount an individual bank borrows to secure capital. Banks that borrow are more at risk of failure and more likely to require lender of last resort support from the state.

Any other way through austerity measures will damage the national economy, reducing GDP or potential GDP, as well as hurting a lot of voters who will naturally sweep the offending government away like a turd off a front lawn.

Hopefully this incompetent government will be so thoroughly routed at the next election that Labor and the Greens will be able to bring in massive tax reform that will safeguard our lifestyle for generations.

Simoc:

05 May 2014 8:05:34pm

Well Ray you can bet that the big miners will concentrate on their off shore mining interests until the tax is repealed. The country will quickly feel the effect of the tax after the miners put their interests elsewhere or make marginal profits and the government would be dumped at the next election. I can't see miners putting a billion dollars up front 5-10 years before earning a dime from a major project, with a dodgy tax in place.

Jimmy Necktie:

05 May 2014 11:18:10am

"The tax from fuel does not get spent on roads, anyway. It goes into consolidated revenue, same as every other tax"

That, IMO, is a big part of the problem Nobody knows what pays for what anymore. Specific taxes and levies, eg Medicare or fuel excise, ought to go 100% to the funds they are intended for. At least then you know what you're dealing with - ie is the road revenue not enough, or did we spend it on something else.

Tax Me:

05 May 2014 12:30:39pm

And that is a great point Jimmy. Targeted taxes or levies are not always funnelled to where they are designated. A recent example - the flood levy. Where is the differential accounting on the revenue raised from that to fully disclose its receipt and dispersal to infrastructure rebuild etc etc?

Bibbicton:

05 May 2014 7:43:06pm

The lack of transparency is everywhere and getting worse. the federal government uses tax supposedly for one thing and spends it on something for which there is no relationship. It is all because there is no accounting pressure on the federal government to disclose what happens. The cause essentially arises from foolish people's belief that the federal government can run things better than the states so they hand things over. What really happens is the fedreal government has no incentive to run things better unlike the states and local government where there is a need to compete with each other. Once the feds get hold of something there is enormous waste and internal fighting, lobbying and politics only matters. Careful accounting for the people's money means nothing to them. Why should it?

PW:

05 May 2014 8:56:51pm

Fuel levy is a tax on fuel use. Liqour excise is a tax on alcoholic products. Tobacco excise is a tax on tobacco products.

All of the above, being taxes, go straight into Govt coffers to do with as they wish. There are no rebates on booze and fags, there shouldn't be on petroleum products either. And is should be indexed like the others.

Tator:

05 May 2014 11:10:56am

Rinaldo,my brother in law is a farmer on the Eyre Peninsula. He drives a petrol car for on road stuff and a diesel ute for farm business. Occasionally the ute goes on road but it is always on farm business. Plus he has to have separate diesel tanks for his farm trucks which do most of their work on road and comprehensive records need to be kept as it is all auditable by the tax man.

All railway use of diesel is exempt from fuel tax, even the state based railways.

Rinaldo:

John:

05 May 2014 12:57:31pm

Rinaldo, there is a basic misunderstanding with your words.

If the use is "on-roads" then it is not "on-farm" and it is therefore not exempt from the tax.

While the truck or ute or whatever is used off-road the tax does not apply. You could buy yourself a diesel powered Rolls-Royce to drive the pigs from one field to another, if you chose, and the fuel tax would not apply while you were doing it.

The distinction between "road use" and "non-road use" is carefully set out by the ATO. As an example, if a truck uses diesel as fuel while on the road, the fuel is subject to tax. But if the truck is fitted with a diesel powered refrigeration or freezer unit, and that unit runs on diesel fuel from a separate tank, then that fuel is exempt. The fuel for the freezer unit is not used for "on road" purposes.

Tator:

foxtrot:

05 May 2014 11:12:21am

You think the state should give a rebate to itself?

This is the kind of confused thinking that leads to yet more entitled thinking to "even things up", rather than removing the source, and ending all welfare that is not related to supporting the people who do in fact really need it.

Jimmy Necktie:

05 May 2014 11:20:39am

Rinaldo, farmers typically have on-site tanks. The fuel they use for machinery is delivered by truck and marked with a dye. If they are caught driving on a public road with the marked fuel in their tank they are fined.

Jimmy Necktie:

05 May 2014 1:53:25pm

my mistake. I looked it up. Australia only dyes heating oil for some reason.

But I'm not surprised Australia has not adopted a system that would bypass the need for rebates (as the excise would never be applied in the first place to "marked" fuel), not complicated enough for Aus.

John:

05 May 2014 11:34:40am

Rinaldo, I don't know what individual farmers own by way of vehicles, but if a farmer owns a diesel powered car and drives it solely and only within the boundaries of the farm then the diesel tax does not apply. But if the vehicle is driven on the roads the tax does apply. The same conditions apply to you and me and every other Australian. If we own a diesel powered car and drive on the roads, we pay the tax. If we don't - then we don't.

As a general "rule-of-thumb" policy, the ATO regards a diesel driven car as a road vehicle and therefore liable to the tax. If the vehicle is used both on and off the roads, in order to claim the non-taxed portion of the use a detailed log book has to be kept showing dates, times and distances driven.

I don't know the answer to your question about trains, but I'll endeavour to track something down. My guess would be that as non-road users they would also be non tax payers.

John:

05 May 2014 1:08:08pm

I'm sorry that you are having so much trouble with what is really a very simple piece of information.

If you "get a rebate of $5 for a business expense" then that is not $5 less tax you have to pay. It is $5 less expenditure, which reduces your overall expenditure and increases your overall profit. Therefore you will pay more tax, not less.

You do not "take $5 off my total declared income" because that would be tax evasion, and if you do attempt to do that you are liable to very severe penalties.

I'll spell it out again for you, very simply:

1) If you engage in a taxable activity, you are liable to pay tax;2) If you do not engage in a taxable activity, you do not pay tax.

And again, also very simply: The diesel tax exemption is not a rebate. No matter how many times you attempt to twist the truth, that fact will always stand.

Dugong:

Blzbob:

I believe rod was getting rebates confused with tax deductions.With a tax deduction, it comes of of you taxable income.With a rebate it is deducted directly from the tax you would have otherwise paid.

Workers get tax deductions.Businesses get tax rebates.

When I had to drive 40 miles a day to drive tractors for a cereal farmer, I got no deductions.When my employer drove to town to "pick up his mail" (and socialise), he still got 100% of the diesel fuel rebate.

china:

05 May 2014 10:58:20am

Well said John.The diesel rebate is a bone that some people will just not let go.The rebate is the road component.Maybe we should say that those on 30% tax should pay 40% because they are getting a discount!

pigman:

china:

05 May 2014 12:36:30pm

Pigman, you just do not get it.The tax is not due from them as they do not use the diesel on road.In a practical sense, the only sensible way to administer this, is to provide a rebate.Potentially, in this technological age, I guess it could be possible to process the price difference at point of sale.Try and understand what this is about instead of just mouthing platitudes.

billybob:

05 May 2014 6:46:40pm

I own a sailing yacht that uses diesel fuel. The fuel is used for both power generation and propulsion. I do not ever drive my yacht on the road. So why then should I pay excise on the fuel? What conclusion do you think I arrive at when I hear people claim the fuel excise is for road maintanence. Short and curlies.

John:

John:

05 May 2014 9:35:49pm

4wd, the position is exactly as you have asked.

If any individual uses his/her diesel powered vehicle off the roads then a tax rebate can be claimed. It is necessary for the proper documentation to be kept showing the usage, the kilometres travelled and the dates and times, but if all the required formalities are completed a rebate can be claimed.

Please note this very important point. When you buy the diesel fuel you pay the tax inclusive price. When you make the claim you get a rebate. But if you are putting fuel into a combine harvester or a piece of machinery in a factory you buy the fuel without the added road tax. You do not get a rebate. You get a tax exemption.

The whole point of introducing a fuel "road use" tax was to raise revenue for the repair and maintenance of the road system. By placing the burden of tax on the road users, you are requiring those who have caused the deterioration to pay for the repair. Combine harvesters on a farm or machinery in a factory do not cause damage to the roads.

Your point about transporting the fuel does not have merit. The tanker full of diesel fuel being delivered is levied for the tax for the fuel it uses. It does not pay the tax on the load it carries.

Reagan Country:

05 May 2014 3:24:46pm

Correct John. It amazes me how so many people think this is a subsidy. It's not. It's a rebate for tax paid where tax should not have been paid and it applies beyond the mining industry. My understanding is that the rebate is applied because it's simpler to charge everyone who uses diesel and then rebate than charging some and not others on a case by case basis.

Pilbycrow:

05 May 2014 4:12:43pm

A rebate it may well be, but it doesn't change the fact that having it means that mining companies do not attempt to innovate because the status quo is so much more inviting. I worked with a company once that was developing LNG as a fuel for the mining industry. The savings in cost for any mining company would be quite large and if monetary penalties for failing to innovate and plan solutions to the imposts were not in place we will not innovate. Australia will remain stagnant and the people will suffer from us failing to be at the forefront of new technologies meant to improve not only the mining industry, but provide the world with technologies WE have developed and licenced, thus improving Australia as a whole.

foxtrot:

05 May 2014 11:09:39am

I don't think anyone should get any fuel rebate at all, if farmers or miners have incurred that cost, then like any business they should build it into their prices. Like all the other overheads in a business, the customer eventually pays if they want your product .. big "if" there for farmers, but such is life.

It's welfare and the farming and mining industry now see it as an entitlement.

If Abbott can wean these industries off this entitlement, he is a better person than anyone who has gone before him.

it will be a real test of backbone to see someone really take on all the "entitled" people and groups in Australia.

It's hardly equitable to call "entitlement" on anyone in particular, if you don't call it on everyone.

So I bunch mining and farmers with the car industry, film industry and anyone else who seeks taxpayer contributions to their venture or endeavours.

If you can't afford it, you're not in business, you're on welfare and as such have no guarantee nor should you expect it.

Either you go and borrow the money if you don't have it and pay it back like the rest of us in business, or you're not really "in business"

if you receive taxpayer funds, then like it or not, you are a government income recipient and the same as anyone getting welfare benefits, by a different name, and not entitled to demand anything!

We're sick of all of you to be honest, we accept there are people in our community who will need help, maybe forever and we are there to provide a safety net for them, but not for every group or industry who cannot stand on it's own two feet.

Jimmy Necktie:

05 May 2014 1:44:17pm

"if farmers or miners have incurred that "

But they have not incurred that. The excise tax is to pay for road maintenance, by people who use the roads, via a tax on fuel. If you run a diesel generator or an ore truck, for example, then they don't use roads.

Say they put a tax on junk food to cover increased health costs to people who eat junk food - will you still pay it when you buy only apples? Why not?

I don't know, but the fact the tax is on diesel only, makes me think the target was 18-wheel transport trucks and the like. In which case the cost certainly is factored into the price of everything delivered by truck.

Nobody has mentioned trains, by the way. Should diesel electric trains pay for road upkeep too?

MD:

05 May 2014 3:00:44pm

You're right. All fuel taxes and excises are fed into general revenue. None of it is sequestered into on-road and off-road components, the money that the commonwealth funds road building and maintenence with is arbitrarily distributed from general revenue. If any concession that's notionally due to not using road infrastructure is warranted, it should be proportional to the amount that the federal government SPENDS on roads each year, not the amount that it collects in fuel consumption taxes.

Bibbicton:

05 May 2014 7:21:39pm

I agree with MD. Why should peole pay for things they don't use? The whole situation with excise on fuel started with the idea that it should pay for roads. But Now the federal government has taken a lot of it for other purposes. Why wouldn't they ? They do the same for just about everything. The reason is because they have nobody to answer to or compete with. The stupidity is that some people think by giving they more power over what the states and councils now control the situation will improve. It is bad enough taxes are required (states must compete with other states when increasing taxes) but even worse when taxes are handed over to an all powerful non accountable central government with no competition to keep them restrained. The federal politicians run wild wasting other people's money. Fuel taxes are only an example of the abuses taking place.

JohnnoH:

05 May 2014 11:09:48am

Quite true JohnC, the mining companies don't need the fuel rebate. They wrote their own tax scheme for the previous government and no pay no tax on profits. What profits are made are sent overseas and put into tax havenss. The minerals in the the ground are practically given to them. Then the MYTH appears if we "tax" them or don't give them what they want, it will cost jobs. My view is, if they want the minerals make them pay for it. If they want the fuel, make them pay for it.

china:

Tator:

05 May 2014 1:12:27pm

JohnnoHMining companies pay company tax on profits made. It may appear to not be much but mining is a massively capital intensive industry with huge up front costs even before any ore is mined so there are huge losses up front that need to be written off over decades.

Reinhard :

05 May 2014 6:55:26pm

"Australian Treasury estimates prepared for the Henry tax review found mineral taxes and royalties declined as a share of total mineral profits from about 40 per cent in 2001-02 to less than 15 per cent in 2008-09. "Ref : "They're our resources, and it's time miners paid more to dig them up" SMH March 9, 2012 Jessica Irvine "Over the past decade, the mining sector has come to generate a higher proportion of total profits. The mining sector's share of profits has risen from 16 per cent in 2002-03 to 29 per cent in 2011-12." Ref: "Treasury does some digging to offer a mine of useful myth-busting" SMH Jessica Irvine May 11, 2012

MD:

05 May 2014 7:30:17pm

That's an observation without context. It's as likely that an agglomeration of smaller companies might return more to the country by paying more tax, employing more people, or otherwise delivering results that have other compound benefits, like providing higher dividends to more people, shareholders and others, per unit of resource obtained. Absence of BHP doesn't create a vacuum.

I think I think:

05 May 2014 7:38:59pm

To all those defending the rebate as fair and just, it seems you have not factored the effect of allowing these industries to compete against normal Australians for a shared resource. This clearly reduces supply, increases demand and increases prices for everyday Aussies, who not only pay tax but artificially inflated prices through this inequitable system. To put it more bluntly, mum and dads pay tax to facilitate big business inflating diesel prices.

big joe:

05 May 2014 12:24:56pm

ITIT, the government is doing what needs to be done and no one is denying that tough measures needed to be taken. You and the rest of the lefties need to grow a backbone instead of a wishbone. The age of entitlement is over, Abbott promised that he would take the necessary measures and enough people agreed with him and consequently he won a landslide victory last september. Now that he is doing what he promised some of these "swinging voters" feel slighted that some of these measures may affect them and have changed their minds. Unfortunately, that is the calibre of the average "swinging voter" and perhaps we need a new socialist party in Australia, we could call it the "gimme gimme" party, massively increase taxation on the middle class and borrow more, no problem until the whole rotton edifice comes crashing down, but you should know that, it happened last September. Both major parties are going to have to get used to this sense of entitlement because this is the way of the future in this country. Stand by for a succession of one term governments.

I think I think:

05 May 2014 8:24:50pm

Come now, joe. If you actually had backbone, you wouldnt be afeared of takin on big business like the banks. Clearly, they are gorging at the trough of easy superannuation money - why is that ok, in your opinion?

Alpo:

05 May 2014 9:46:25am

JRM, what "rotten apples"? The international financial markets have demonstrated (so far) great confidence in the economy left by the efficient and productive Labor Government. The apparent plans of this incompetent Abbott Government to shrink the economy will drive us into recession, leading to a loss of confidence of the international markets in our economy. You don't seem to see the disaster unfolding... but you will feel it when it comes after the Budget from Hell is delivered and implemented.As for our government debt, it's growth was slowing down and actually decreasing under Labor, but since this bunch has been in Government it's taken a skyrocketing path. The Coalition policies are actually getting us into greater debt, and the only solution they can think of is to break the backbone of our economic system and productive capacity, and plunge the workers of Australia into poverty.... That's what you get when you have Neoliberals in Government!

paulri:

05 May 2014 10:08:02am

A truly blinkered response. "left by the efficient and productive labor government" Good luck convincing the families who lost someone as a result of labor's efficiency in rolling out the home insulation scheme on that one

Abbottpell:

Blzbob:

05 May 2014 10:48:58am

Wow! are you saying that no one has ever died as a result of working in any other industry other than the insulation scheme.Let's have an inquiry into every industry that has ever had a death occur due to it's work practices. Then hold those responsible to scrutiny.99.999% chance it was the fault of the employer pushing to make more dosh.

Craig of Bathurst:

Yes, Blzbob, there are always inquiries into deaths at workplaces. That's what (in NSW) WorkCover do.

Go to the WorkCover website and navigate to 'Law and policy' and then 'Prosecutions'.

As with corporate negligence, what needs to now happen is for Rudd and Garrett to be prosecuted for negligence. They forced out the scheme while being warned by industry specialists and advisers of the obvious risks.

Alpo:

05 May 2014 12:42:17pm

Craig, you are just repeating the line of attack of the Coalition. One positive thing about this enquiry is that we will hear the Rudd's line of attack as well... Remember the "Utegate"? For as long as Turnbull and Grech were speaking, Rudd seemed to be in their pockets, did he?.... But then Rudd started to reply to the accusations and.....

The nose:

05 May 2014 1:42:45pm

COB, so what you are saying is that Gillard and Rudd should have put in place, exactly what? before the insulation program started. Were there not already OH&S regulations in place, surely it's the contracters fault!

Tiresias:

The insulation industry sent 19 letters to Garrett to advise him of risks. It sounds as if the industry was not properly regulated.

Garrett set about taking the advice of the industry.

Unfortunately the supervisors of the workers did not take heed of the regulations. One worker unfortunately died while using a stapler when such a practice had been banned. Two inexperienced workers died from heat exhaustion - an OH&S issue. One died from the faulty work of an electrician.

The CSIRO advises us that the insulation industry was safer under Labor than under the the Coalition.

John:

05 May 2014 9:41:54pm

Tiresias, Garret did not set about taking the advice of the industry.

He wrote to Prime Minister Rudd on several occasions (some sources put it as many as twelve times) asking with increasing urgency that the scheme be suspended while proper supervision and control procedures were put in place.

Rudd refused every time and ordered that the scheme should continue to be rushed out, even after the first two deaths had occurred.

Blzbob:

firthy:

05 May 2014 1:05:58pm

But this was a government scheme where the government was told (before it was implemented) that the scheme as prposed posed serious safety issues. That is quite different than the norm (ie the example you give) and the previous government should be held to account for such sloppy administration. After all it was their scheme...

Pilbycrow:

05 May 2014 4:29:02pm

I'm sure John Howard was told that Australia's participation in the invasion of Irag would result in Casualties to Australian troops. Even after the Lies produced to start that war were revealed, Troops kept suffering due to Howards policy. Its also Ironic that Howard himself had deaths occur under his watch on the insulation scheme. Somehow these deaths are forgotten but in terms of how much was gained from the scheme used by labor it was definitely infinitely less dangerous than what occurred under John Howards "leadership".

Well, yes we do. And so do economists. However, the disaster they and I recognise is that if nothing is now done to correct the budget then Australia will find itself bankrupt in years ahead. Labor debt and deficits coupled with too many unproductive (unemployed) people being supported by too few productive people is the principal origin of our woe.

That you can't recognise it is proof of either your ignorance, or your unwillingness to admit you are wrong.

Tiresias:

My problem with the AGW argument is that those opposed, while agreeing with each other about their denial, seem unable to come up with a science to back their denial.

That is, I agree with Tony Eggleton, Emeritus Professor at the ANU, who says in his book on Climate Change (Cambridge UP, 2013) that the deniers have 'no body of knowledge which underpins their views' (p. 168)

John:

06 May 2014 8:07:00am

A tricky bit of deception, Tiresias, but one upon which the failing and flailing alarmists are calling more and more often as their case falls apart around them.

Is it surprising that people like you and Eggleton claim "no body of knowledge which underpins their views" but never go on to acknowledge that there cannot be a body of evidence to prove a non-existent case? There is no need for me to look for a "body of evidence", Tiresias. All I need to do is look at the "body of evidence" that those who proclaim the case have put up and evaluate it.

If, as is constantly the case, the alarmists cannot do any more than say "If you don't agree, then prove a negative" then I know that I have won the intellectual battle.

And we are not looking at different things. You base your faith on the fact that others have the same faith. So don't ask me to prove that there is no god.

Alpo:

05 May 2014 1:26:24pm

"ignorant as Alpo", wrote Craig.... Demonstrate it, or apologise! Gratuitous offensive remarks abound in the speech of those with no arguments.

The disaster is coming with the recessive economic decisions of this Neoliberal Government. Learn economics first, then try to produce an argument. Debt makes sense only in terms of our capacity for repayment. I explained this basic concept to you guys a million times. If I owe 1 million dollars to a bank I won't be able to sleep at night, if James Packer owes the same million dollars he will be as relaxed as always. Labor left us in the latter circumstance, but this Government of incompetents is taking us to the former.... Don't thank me for teaching you, this is all free of charge thanks to everybody's ABC: a fundamental public service.

Alpo:

05 May 2014 6:09:43pm

Craig, of course you are ignorant and you have just demonstrated it. In the long term? Yes, as Keynes once said in a reply to Hayek: "In the long-term we are all dead". The Gillard Government did contract public expenditures to keep the deficit under control but it was the Business community (along with the Unions) who told Swan to stop it because the economy was not ready for such a contraction. The current speeding trend in the deficit started and has continued with this Government, in fact they hit the road with $8+ billion in borrowing.But I agree with Peter Martin, the budget deficit must be tackled by also (and perhaps especially) increasing revenues. That was the objective of policies such as the MRRT that the Coalition strongly opposed. But this Government of Neoliberal ideologues are just targeting expenditures.

Cut hard?.... Recession!.... Cut early?.... Political hope that by 2016 the People who are unemployed will forget that they are actually unemployed and why?... Dream on!

"Alpo is like the little kid at school dreaming out the window".... That was a final bankrupt statement I see... you are ready for argumentative receivership I suggest!

Darren:

05 May 2014 9:59:43am

"All the rotten apples have been exposed". Then why is the chief economist of commsec and numerous other highly respected economists insisting that there is NO budget emergency. They point out that Australia's debt to gdp ratio is15% and will climb to 17% by 2023 if a busiess as usual approach is taken. They point out the Abbott coalition inherited 6% unemployment, 2.9% inflation, AAA credit rating (which no agency is threatening to downgrade), a strong banking sector and an economy that continues to grow after 22years of consecutive growth. So much for rotten apples. These economists say that until politicians and the media start dealing in reality Australians will be stuck with the childish lies the Abbott government continue to peddle. The Abbott government is the only disaster Australans have inherited from Labor.

Alpo:

05 May 2014 11:02:03am

JRM,The People are already feeling the pinch of the bankrupt policies of this Government so far. After the Budget from Hell is delivered, they will feel that the pinch is becoming true pain. By 2016 (or earlier) the pain is going to be felt as a full blown emergency. The medicine at their disposal is simple, and the People know it: Vote this bunch of Neoliberal clowns back into opposition before the damage becomes irreversible.

crow:

no, that is how it SHOULD work, if we had an engaged electorate who could see through the nonsense and hysteria peddled by the Abbott opposition and News Ltd.

but we dont, and they believe our economy is in tatters, despite every expert right round the country telling us how wonderful our economy is. despite every graph showing how low our debt is, etc.

now, it looks like the Coalition is slumping in the polls as the people wake up to the realisation that the remedy for the LNP is always punish the poor and less well off (medicare cuts, education changes etc) and never to the high end of town. so maybe the people are starting to agree with you, but to my mind, Id always bet on fear and ignorance winning out over facts and engagement. if fear wasnt so effective the Coalition wouldnt keep using it.

firthy:

05 May 2014 1:16:32pm

bankrupt polies of the government so far? Like what Alpo? Stopping the boats? really that is the only major policy the government has managed to implement in the 8 months they have been in. How that costs people (other than boat people and people smugglers but I'm sure your post didn't refer to them) I don't know. Frankly you wouldn't know either.

Alpo:

05 May 2014 2:31:43pm

Yes firthy, like the boats that keep coming, the latest just a few days ago that prompted the suspension of Abbott's visit to Indonesia. Another day, another policy failure. But there are more policy failures, like the one that has increased our Government debt through more borrowing. What about their backing down from their promises: is the NDIS going to proceed as promised or is it going to be scaled down? Have you heard of Gonski lately?... Not even their much publicised crackdown on Unions seems to be going anywhere since the ICAC has been collecting Liberal politician after Liberal politician in their long list of corruption cases..... But wait, we are now all looking forward to see the Budget from Hell!

taxedoff:

05 May 2014 12:46:43pm

the facts aren't there just spin and lies to make political mileage rather than debate the truth and reality of an inherited shared mire from successive vote scoring govts who seek votes over the nations long term intrests.

firthy:

05 May 2014 1:13:26pm

But that isn't the entire story though is it Darren. Those same economists all state that the budget has a major structural problems. So things might be OK now as you argue but if we don't do anything to change our current spending and revenue raising patterns then our economic situation will get steadily worse. The debate we should be having is in regard to what we should do now to ensure a prosperous future. Now that could involve slashing spending, raising taxes or a combination of both. The latter is the approach I would prefer. The LNP may be going that way although I wait for the budget to see how. The ALP didn't do much in this regard whilst they were in government (they did tinker around the edges to some extent) and the greens just whinge. How the latter can oppose a tax increase on high income earners is beyond me - it is consistent with their view of high income earners anyway (that they don't pay enough tax).

Si:

05 May 2014 10:03:04am

Hate to mention but Labor inherited that debt from the Libs, and if Mr Howard didn't 'Pork Barrel" so much. Labor would never of had to go into debt keeping the country in good shape... just look at the rest of the world n wonder how 10% unemployment, and <1% interest rates would feel like?

Tator:

05 May 2014 11:33:00am

Si,What debt, Howard left Rudd Zero net debt. You are getting mixed up with Koukoulas' incorrect claim that most of the debt left by Keating was actually left by Fraser. Now that is incorrect due to Keating generating around $80 billion in new debt with the deficits from 1990/91 to 95/96.

Alpo:

05 May 2014 11:58:36am

Tator,Howard left Rudd with a positive gross debt. Please try not to play with the gross/net difference following a political convenience. It was the gross debt that was quoted under Rudd/Gillard, but it is the net debt (a much lower figure) that is quoted when referring to Howard... This kind of clowning must stop!

Reinhard:

Tator:

05 May 2014 12:48:01pm

Reinhard,Debt does not translate with appreciation along with GDP. Debt stays at its issued face value. Debt is issued as a government bond which pays its interest regularly. Now if this interest is not paid, it is considered a sovereign default. Now Australia did not default on its bonds issue during the Hawke/Keating years. So the value of the bonds issued stayed at the face value. Even if what you suggest is the case, the debt had been reduced down to $16 billion in 1990 after getting blown out to nearly $30 billion by Hawke in 86/87 as he increased spending in real terms by 9+ % the previous two years.On top of that, nobody has ever debunked my theory that it is a crock due to Keating's deficits nearly totalling $80 billion from 90/91 to 95/96.

Alpo,I only ever use net debt as I understand the reasoning behind the debt left behind which was to allow the proper functioning of the bond market with minimal risk government securities providing the backbone of the market.

Alpo:

05 May 2014 1:35:05pm

tator,I don't recall your specific use of debt before the 7th of September 2013, that's why in my post I wrote the more ambiguous "that was quoted" (rather than the more direct "that you quoted"). But I do remember very well that quite a few people did use that trick I mentioned in my post, and I had to correct them several times. We can't change the past, of course, but it's important not to forget it.

Reinhard:

05 May 2014 2:52:43pm

Tator comparing levels of debt without factoring inflation is about as ignorant as blaming Labor for the debt. The only Budgets in the past 45 years where the govt had declining revenues were the 91-92 & 92-93, and the 2008-09 & 2010-11 budgets

Tator:

05 May 2014 5:55:45pm

Reinhard,Inflation is the friend of debt. For example, you take out a mortgage for $500k tomorrow, and once you have borrowed it and fixed the interest rate at say 5% for 10 years, inflation kicks in to 15 % and drives your wages up by 15% pa for the next ten years all the mean time, you are paying your mortgage off at the agreed repayments.Do you believe that your mortgage repayments grow as a percentage of your income or do they shrink?Now in the real world. Your mortgage repayments shrink as a percentage of your income as your income increases with inflation so you now spend less of your income on your mortgage or you can increase your repayments to the original percentage of your income and pay it off sooner. This is what happened with the $9.1 billion that Fraser left Hawke. It was inflated away as $9.1 billion now only was 2.2% of GDP as GDP increased, the debt didn't as government bonds yields are fixed on issue which means the interest rate is fixed for the term of the bond.Now this is exactly what the US is trying to attempt by its Quantative easing program which is trying to inflate its debt away rather than paying it off.Now as for the revenue issues, this debt was issued prior to all those years and government revenue has little to do with the effect of inflation on debt.Now using your logic, Keatings debt would have been a net debt worth nearly $200 billion by 2007(18.1% of GDP) , but we had ZERO net debt in 2007, so Howard should not be as criticised as much by you. And you have never been able to debunk the fact that Keating as PM presided over deficits totalling nearly $80 billion and thus he owns the vast bulk of the debt left at 1996.

Reinhard :

05 May 2014 6:37:24pm

Tator I cannot believe that you persist with that ludicrous argument, the value of one dollar in 1983 had been effectively "deflated" by 88.7% by 1996. Also for once can you please stop blaming Keating (and Swan) and acknowledge the revenue declines due to the 80's global recession and GFC.

Tator:

06 May 2014 7:01:29am

Ludicrous argument. Its a common enough economic theory that even economists like Paul Krugman support.As for the Recession that we had to have, even Keating and Peter Walsh have admitted that they screwed the pooch on that one by holding interest rates far too high for too long as they didn't understand the effect that it would have on an over leveraged economy.

Reinhard :

06 May 2014 7:20:40am

Tator your argument makes the false assumption that govt revenues increased in line with inflation when they obviously did not, in fact they declined as I have repeatedly pointed out ...It was not Keating who held interest rates too high it was the RBA and Keating was not inclined to force the issue as he wanted to retain the RBA's independence

Tator:

06 May 2014 8:17:28am

It has nothing to do with government revenues Reinhard, it has everthing to do with inflation, which between 1983 and 1993 was high and inflated the dollar so that $9 billion was not worth as much in 1996 as it was in 1983. You have to remember, debt does not gain value with inflation. Otherwise nobody would be able to pay their mortgages off ever. Go and google the effect of inflation on debt and you will see that it is a common view that debt can be inflated away.BTW, whenever you lefties talk about how much debt Howard had to pay back, you always use 1996 dollars which is the same principle as what I am using. Can't have it both ways otherwise Keatings debt would have been the equivalent of $200 billion in 2007 dollars.

taxedoff:

05 May 2014 2:25:09pm

howard left rudd with middle class entitlements and unnessary tax cuts, as well as having not spent on infrastructure all these snowball into todays ecconomy its not a case of each 3 years has no effect on the next .

Skeptic:

05 May 2014 1:03:21pm

As far as I can see, the "clever tactics" you claim are exercised by the Liberals are so easily confused with "they just don't know what the (beep) they are doing" that *I* can't tell the difference! As for Shorten, he is most likely keeping his head down deliberately and keeping his powder dry. Now THAT is a clever tactic!

Miowarra:

05 May 2014 9:17:08am

The line which amused/horrified/disgusted me the most was: "...stack it with a bunch of high profile appointees whose integrity is beyond question ..."

I can certainly question the integrity of the Liberal party faithful who were appointed to the Commission of Audit. Does anybody seriously believe that they're not receiving their riding instructions from the Office of the Prime Minister? They'll do as they're told by The Party to further the best interests of The Party, not the public.

Similarly the representatives of the bankers and Business Council will advocate in the best interest of their parent organisations, the shadowy denizens of the realm of high finance and Big Business (You DO remember that the Business Council represents only the wealthiest 100 businesses, not all of them and certainly not "small business")?

The rest of us are only the fodder for these predators and this Commission of Audit has only made the concept of "integrity" a laughingstock while it denudes our savings for our old age.

Well, that's the rest of you. My superannuation is safely in the hands of a government agency which doesn't rip out fees and provides a better return than the commercial "products".

TrevorN:

05 May 2014 10:42:09am

Claptrap!

Industry fund boards are made up of both employer and worker representatives. They operate out in the open unlike the for profit fuds whose boards are made up of representaives from the financial industry. Ther is little or no representatives from the members and that is why the for profit funds cost members more and perform worse than the industry funds whose membership representatives, be they union nominated or elected by the members, guard the interests of those members from being ripped off.

Stop inventing things to suit your political purposes. It does no one any good to deliberately misrepresent the facts.

Applaudanum:

"I agree, the union officials in Australia are our worst nightmare, as they show in politics so they do in the boardrooms that they are completely self obsessed and hardly benevolent."

That must by why the union/industry funds outperform the private funds year in, year out. Or does the consistently poor performance on the part of the private funds reflect the fact that private industry is always more efficient than collective organisations?

Cal:

05 May 2014 12:37:47pm

Obviously Mick you don't own shares in some of Australia's major companies. As a shareholder, all I see at AGMs is remuneration reports where the Directors and senior management group gorging themselves on ever increasing pay packages, where the business is doing well or not.

Todd:

Neither current party can be trusted, Mick. I know that now that Abbott has had his Gillard moment and hiked taxes.

I heard them saying it is not a new tax and is somehow OK then. Well, by that logic, Mick, they could increase income tax to 75% for over 80k and to 90% for over 180k. Would that be cool, too.

Nup, Abbott has done his dash. Why can't we have JWH back. Not only did he look after middle Australia, he took tax reform to the people. Say what you want about him, he was more honest than Gillard, Rudd or Abbott. Especially, when they are going ahead with ridiculously generous PPL while at the same time saying that we are in such bad shape that we need to tax middle income Aussies and go back on a promise.

Abbott is just being an idiot. If he has to break a promise, can the NDIS or PPL. Do NOT get caught lying about a tax that will hurt avearge Aussies. I thought if anyone would know that, he would. His political naivete beggars belief and it will kick the economy in the guts as it reduces aggregate demand and industries like Retail will be shedding jobs, poutting further pressure on revenue. The positive, for me, is that interest rates cannot go up while we deal with damage Abbott's tax will do.

This is why I advocate paying the PM at least what the highest paid CEO gets. I think the quality of candidates would be far stronger, saving us BILLIONS in wiser decisions. That is why shareholders approve such high pay packets for their CEOs. Pay that comes, indirectly, from the shareholders themselves. They realise that by spending that $10m per year, they are better off if that high quality CEO means more than that to the bottom line. I am sure that Australia's best CEO sitting in the Lodge would be a wise investment for our multi trillion dollar organisation called the Commonwealth of Australia.

Nothing else can explain the fact that we have a choice between dumb and dumber. It stands to reason as we pay MUA workers almost what the PM gets. Seriously, you can keep cutting pollies entitlements/conditions/salaries, just don't complain when we get choices of either Shorten and Milne running the country (shudder) or second rate Liberals like Abbott. This tax alone will cost the country BILLIONS in lost growth and investment. Yet we get all hot under the collar when some polly spends a couple of grand on travel.

I think I think:

05 May 2014 8:47:09pm

@Todd, what makes you think CEOs are competent. The real truth that they dont want you to know is that there is little skill in being a CEO other than not stuffing up too badly. I would much rather have a person leading who wants to do the job for the achievements asociated than someone who does it for the cash.

Morestone:

05 May 2014 6:29:21pm

What about the corrupt practices of the financial management sector, did you not read the scuttlebutt earlier today re the Waltons construction co liquidation. Is it because the unions are outside this "club", whose questionable, morally bankrupt (no pun intended) approaches cost us all.

jennbrad:

05 May 2014 12:33:07pm

You don't need "riding instructions" if you select the right people. If you ensure you choose respected people of certain mind sets, you'll get what you want. So if the people chosen in this case all believe in "small government" and that the private sector is always better, more efficient and more effective than the public sector (regardless of actual facts and figures - I mean, Medibank Private is way ahead of the private health insurers [and we can't have that, can we?]), then their recommendations will include a raft of hiving off any profitable government service/business to the private sector, so their mates can make a profit from it and we, the taxpaying public, can lose the income that such areas previously (and still) contribute to the budget bottom line.

The superannuation rules need an overhaul all right, but that might offend all those who make such large profits from their fees etc.

Bah_humbug:

05 May 2014 11:00:18am

* bated breath, not baited, yank. Tricky language, English. Otherwise, I largely agree with your comment. There is a simple and elegant solution to super concessions favouring those on high incomes: change the contributions tax of 15% to a simple tax reduction compared to your marginal rate, so that whatever your marginal rate, contributions to super are 15% less. Between $18,200 and $37,000 contributions tax would be 4% (19% less 15%). Over $180,000 it would be 30% (45% less 15%), and the same calculations for rates in between. Contributions to super for those earning less than $18,200 would have no contributions tax at all. That way everyone gets the same incentive to contribute to super.

Bah_humbug:

05 May 2014 12:16:28pm

You're welcome, though in fairness you're not on your Pat Malone on that one, just about everyone does it. As for the Senate, to paraphrase Groucho Marx: I'm not sure I would want to be a member of a Party that endorsed me as a candidate. My idea does make sense - thank you - which is why it would never get up. It would be seen as "another tax grab on the wealthy". Likewise, it makes perfect sense for the wealthy to temporarily pay a bit more as the Rabbit would like to do if he could get it past his colleagues, because it would simply be taking back a small part of what were far too generous tax cuts from Costello and Howard a decade ago. But he won't - the current Government knows what hand feeds them and they aren't going to bite it. As usual, the poor and middle class will pay.

Spooked:

taxedoff:

05 May 2014 2:44:32pm

raises another problem that the young of today may decide not to go into super but rather put all their energy into real estate and then at 65 make use of their 2 or 3 owned homes.a young person could own 50% of their first home by age 35 then purchase a second home negative gear that one and by 50 purchase house 3 so that by 60 or 65 they own their own house plus an income stream from 2 other houses. why bother with super when you end up not owning it.

micka:

05 May 2014 1:32:17pm

Your pension probably won't be affected as the government's not planning full implementation of the change in pensionable age until 2035. As for others, well, when the pensionable age was first set, most people didn't live until 65. Now, half the kids born today will live into their 90s. They will start work later, be much healthier and wealthier. They will make greater provision for their own retirement and will be calling less on other taxpayers to support them. Wait with baited breath if you must. But you'd be better of taking a deep breath and trusting Joe. Did I mention that the ALP was already raising the pensionable age to 67 and would likely have raised it further to pay for the huge national debt it created?

RC:

05 May 2014 2:13:51pm

Who'd a thought that the LNP in government would be such uncaring charlatans and liars?Our kids, if these measures are not blocked in the Senate, will have to work another 20 years before they retire on a State pension.They're going to pay more taxes per week whilst the crony Companies linked to the LNP will continue to pay none, and even get rebates from the ATO for taxes that they would not have to pay called "levies" should their expected gross incomes be less than they {?} predicted.All this whilst the fees of the Super Fund managers will grow so big that there will be no Fund to payout for the over 70 year old retirees in AD 2020+.When's a rort not a rort?When THE economy is in false crisis?Thank goodness for the Lefties "majority" in the Senate.

cameco96:

05 May 2014 8:38:14am

This plain out and out theft is an enormous issue but I have no faith in government of any persuasion doing anything about it. Reward without value pure and simple. Fees on balances below a certain level could perhaps be abolished? Less compliance on self managed super maybe? Perhaps fees based on a percentage of growth?

TrevorN:

05 May 2014 9:56:14am

As I remember it when Hawke/Keating introduced their compulsory super scheme it was mandatory for them to be administered by not for profit industry schemes. Howard and Costello changed all that when they came into government. The were influenced by their slathering financial industry mates who were drooling over all the profits they could rip off their members.

The fact that industry funds still out perform the for profit mobs is proof that this is the case. The for profit super funds are still ripping off their members and are set to go at it harder if the limits imposed by Labor on the financial advice industry after a string off scandals such as the Storm fiasco are removed as Abbott is proposing to do.

One has to wonder how many "breakfasts" the finance industry had to buy for coalition MP's to get that nifty little change supported.

Applaudanum:

05 May 2014 11:16:08am

Not everyone has that option, Harry. Mind you, if the industry funds are indeed infested with union executives, how are the industry funds consistently outperforming the private funds? What are the private funds infested with, Harry? Commitment to world's best practice and efficiency, perhaps?

harry:

05 May 2014 12:49:52pm

Using the return across all the investment options in a particular fund is totally meaningless since an individual contributor isn't invested across the whole set of products. There are also very low yield, capital guaranteed products that would reduce the overall performance if they are included.

So your stats are meaningless and likely just show the difference in products available and the relative percentage of investments in each, rather than the actual investment performance of the fund managers.

Alpo:

05 May 2014 1:59:29pm

harry,No, you are wrong, because what we are judging here is the overall performance of funds within sectors, and you have to use all areas of investments within those sectors not just the tip of the iceberg. Unless you want to argue that all BT investors for instance, have their money in the "BT Super for life". Happy to see evidence for that. Moreover, if you take for instance Unisuper's (an industry super fund) Global Environmental Opportunities, it produced a 23% return for the year up to 14 March 2014, which is vastly superior to any option in your list. Second, you didn't address my important point about long-term performance rather than cherry picking a specific year. To take your hypothetical example, I agree that investing in the Balanced option of FUND 1 would be rational for that given year, but it may not be if the performance differs over the longer-term, which is the time frame that really matters in superannuation investments.

DG:

Theos:

05 May 2014 12:45:40pm

A more honest comparison would be the long term results from the funds. The list below is the top 10 performing funds to 30 June 2014 (Source is Chantwest media release 21 Jan 2014). Note that EVERY fund on the top 10 list is an industry fund or a corporate fund. There are no retail funds on the list. In addition, retail funds, like those in your list quote returns BEFORE commissions are deducted. Industry funds do not have commissions deducted, while essentially every retail fund does.

Theos:

05 May 2014 12:47:59pm

A more honest comparison would be the long term results from the funds. The list below is the top 10 performing funds to 30 June 2014 (Source is Chantwest media release 21 Jan 2014). Note that EVERY fund on the top 10 list is an industry fund, government fund or a corporate fund. There are no retail funds on the list. In addition, retail funds, like those in your list quote returns BEFORE commissions are deducted. Industry funds do not have commissions deducted, while essentially every retail fund does.

Blzbob:

05 May 2014 11:07:07am

There should be no tax on super contributions, until it reaches 10 times the minimum annual wage.(a substantial nest egg)Then withdrawals should be capped to preserve the principal contributions and taxed at the standard rate of income tax, including anything ( the principal contributions) eventually paid out to a beneficiary.

firthy:

05 May 2014 1:21:17pm

That might have been debated at the time but for profit funds have always been an option. Indeed the article we are discussing notes this. I don't blame Keating for this problem as the idea of compulsory super was a great one of his. But for profit super, without any real regulation of it, is a problem.

Blzbob:

05 May 2014 5:44:44pm

Regulation on any industry should never be set in stone, but instead should be occasionally reviewed for the best outcome.Guidelines could of course be written into the law to ensure the regulations purpose.

Nelly:

05 May 2014 8:39:26am

I wouldn't hold my breath that anything will be done to stop excessive fees being charged, or to make the system more sustainable. According to today's paper, Mr Hockey accepts large "membership fees" from some banking and financial institutions for exclusive access. These guys don't pay money for nothing so we can therefore only conclude that Mr Hockey is well aware of their agenda and considering the current changes to financial advice, as one example, he is well one the way to earning his "fee".

Dove:

05 May 2014 10:35:39am

The treasurer, being a political appointment, requires absolutely no knowledge or understanding of economics. Health ministers don't have to be doctors and transport ministers arrive to work in the back of a limo. With weeks of intensive coaching one might be equipped with a vocabulary to pass off as a treasurer. All they need to so is reel off their politian shtick, avoid the tough questions in the usual way and generally try to convince us that they might know what they're talking about. Hockey is doing a reasonable enough job in this regard, but he's a long way to go before he'll convince everyone. But as you say. Swan couldn't convince a kindergarden.

Fred:

05 May 2014 12:10:34pm

@Dove. I agree with you, but would go further. I fail to see why anyone in Government - major positions PM, treasurer, cabinet ministers etc) should not have substantial economics or financial experience, or preferably, both. That should guard to some extent against ideological stupidity from both sides.

BTW, for what it's worth, anyone with both eyes open can see what a complete dill Swan was as Treasurer and what a mess we now have because of that. And don't give me the AAA rating/World's Best Treasurer crap - they were built on the backs of the achievements of the Hawke/Keating & Howard/Costello governments. He should be embarrassed to have accepted that WBT award!

Tiresias:

05 May 2014 3:08:58pm

Fred,

not only did Oz receive AAA ratings from 3 agencies and Swann receive Treasurer of the Year, but The Economist (UK) and Forbes (USA) economic magazines praised Labor for its responsible economic handling of the economy. The IAREM scored Oz #1 economy in the world for 2013 (rated by the World bank, IMF, Bank Suisse, tradingeconomics.com, Heritage Foundation et al).

Meanwhile, the Howard/Costello fiscal management was described as "profligate" (=wasteful) because of its pork-barrelling "churn" policy. While it left a surplus, it was soon gobbled up by the GFC. As well, Howard's lower taxes means that if the

Tiresias:

05 May 2014 3:30:07pm

Fred,

The AAA rating was received from 3 agencies. As well, The Economist (UK) and Forbes USA) economic magazines praised Labor for its responsible economic management. The IAREM rating placed the Oz economy as #1 in the world for 2013 (rating by the World Bank, IMF, Credit Suisse, tradingeconomics.om, Heritage Foundation et al).

Howard/Costello were rated as "profligate" (=wasteful) for its pork-barrelling "churn" policy. Its surplus was gobbled up in the GFC. We know, too, t. What lower taxes under Howard have led to less revenue, so that without such a reduction Labor would not have such a debt at all. (Still one of the lowest in the world).

Now we have advice from a Commission which has used as it template a document written by the Coalition back in the 1990s, taking just weeks to write, but hidden for 3 months until after the WA elections.

The present considerations presented by Abbott/Hockey are causing divisions within the party itself. In the polls, the Coalition are down. Does not look good.

John:

First, a triple-A rating is not worth the paper it is written on. Any Government can, and most do, manipulate that rating by including or excluding relevant data.

Second, all three of those rating agencies are junk organisations and nothing that they say is worth a pinch of salt. The Australian Federal Court has found that S&P had misled investors by assigning its top AAA rating to financial products that blew up within months. ?In a 1500 page ruling the Court found S&P and investment bank ABN AMRO, which packaged the securities, had ?deceived and misled? 12 Local Government Agencies that had purchased them. One commonly discussed cause was the fact that investment banks had structured complex financial instruments that were likely - even designed - to be worthless over time, then coaxed ratings agencies into giving those "toxic" products high marks. And why did the ratings agencies give those high ratings? Because they wanted the fees and did not care how they got them.

Third, your claim of "profligate" (=wasteful) for its pork-barrelling churn" is an out-and-out bit of dishonesty. You are referring to that IMF report which people of your intent have misquoted and misapplied before. Continuing to rely on the same falsehood will get you nowhere.

Alpo:

05 May 2014 7:26:55pm

"First, a triple-A rating is not worth the paper it is written on. Any Government can, and most do, manipulate that rating by including or excluding relevant data."... Which means that all countries should be rated triple-A by all the three major agencies, but they are not, not even the USA. Hence you are obviously wrong.

Tiresias:

You have not responded to all the claims made about the economic achievements of the Labor government.

Nor is your claim about conspiracies with fake AAA ratings very feasible.

No comments on The Economist, Forbes or the IREAM ratings?

Or Paul Eslake's comment that the current economic situation is not where it should be, but far from being a crisis (ABC interview)?

However, it is now commonly being widely said that Howard wasted the mining boom, relied on selling assets, lowered taxes and allowed the money to "churn'' - and thus set up structural deficiencies which carried on through the Rudd/Gillard period and continue to affect federal economics today. The current Audit document is a Coalition document from the 1990s.

Now we have the current Coalition government with a weird set of policies which are destined to fail. Eslake suggests they could split the party.

John:

06 May 2014 8:15:45am

If you can tell me what economic achievements Swan put in place I'll be happy to look at them. For myself, I simply can't find any.

I didn't make the claim about fake AAA ratings. Other people, up to the Australian Federal Court, have said that. And as far as faking the results for monetary gain, German?MP?Wolf Klinz said: ?They have for a long time after the global financial crisis maintained that they had nothing to do with it. Rather than considering themselves to be primarily a service provider they were only interested in growing their business as quickly as possible?.

I didn't mention The Economist, or Forbes or IREAM, so don't try to slide off into different territory.

I have not claimed that the situation is "in crisis territory". But it is far, far worse that it should have been had Swan and Rudd (and, to a lesser degree, Gillard) exercised even a modicum of reason.

One side of politics says that Howard wasted income. But that is only to be expected.

I don't know how you can call the Coalition's policies "weird" when they are mainly intended to undo the "weird" policies they inherited. But time will tell.

Alfie:

Cobber:

Skeptic:

05 May 2014 1:12:03pm

A grasp of grammar is all fine and good, but I would rather have a treasurer who is fiscally competent and correctly understands that cutting back on government spending during an economic down turn is a VERY BAD tactic. It tends to push things into a recession and everyone loses.

jennbrad:

05 May 2014 12:39:33pm

If it were only "stuff ups" perhaps they could be fixed but the actions and decisions of this government are deliberate, targeted and offensive. If you doubt the intentions and relationships, read today's Canberra Times story about the way in which big business "buys" influence and meetings with the Treasurer. Doubt the poor get that opportunity, so who gets to lobby on their behalf? Who then has the ear of this lot? Not hard to guess is it.

Steve:

05 May 2014 8:42:35am

The looming bill the support the aging baby boomers is the number one problem for the finances of the country. Forget the current "Budget Emergency", it's small beer compared to what is coming down the line over the next decade or two. We need measures to encourage those on low incomes to put some of their own money away for retirement (like the co-payment that was reduced by the previous government and removed altogether by this one) and we need to restructure the superannuation tax breaks to focus the benefits on people who need it. Getting some fees out of the system will help maximise the amount available to retirees and minimise their need for the pension.

The proposed FOFA reforms are a terrible idea and will entrench the place of the big banks in the super industry and lead to further fee inflation. It needs to be stopped.

What about NZ :

05 May 2014 9:09:21am

So why aren't New Zealanders being compelled to put money away? They have a high proportion of baby boomers retiring. Yet rich or poor, the government gives out a handsome pension to everyone, rich or poor? Anyone?

D-N-H-F:

John:

05 May 2014 9:40:14am

Have you read about the concerns being expressed in Japan?

Demographic studies there are showing that by 2060 over 40% of the population will be retired and dependent upon pension support of one kind or another. At the same time the number of children being born to Japanese parents has fallen to an all-time low, with only about 12% of the entire population now of school age. By 2060 that percentage is expected to have fallen to a single digit number.

The Japanese Government is considering financial measures very similar to those being discussed here, but of more stringent and wide-reaching forms.

Jess:

05 May 2014 10:50:18am

yes but Japan has had a falling birthrate for years, it's been documented for ages. They have known about this coming for ages. Their immigration policies also do not compensate for the working ages along. And the traditional employment structure that they have also contribute (pay and promotions are based on time with the company and It's very hard for non-Japanese to have seinor management careers)

Also the Japanese economy is just coming out of a couple of decades of stimulus.

Australia's situation is very different to the Japanese and we have no where near the same issues.

John:

Many Australian politicians (notably Peter Costello) have been aware of this impending problem and have warned us of the implications of an ageing population.

Australia currently has about 20% of the population aged 15 or under. With our trend towards people living longer, that may well change for the worse. If the percentage drops to single figures, as is feared in Japan, we will be facing major societal upheaval and reconstruction.

Yes, Japan has been aware of this general trend since the end of WW2 and done nothing about it. That is why the measures now being discussed are so stringent. Australia should not fall into the same trap. We should start to implement remedial measures at an acceptable level and in an acceptable way so that we do not find ourselves in a Japan-like situation in two or three generations.

Japan's short period of stimulus was not occasioned by and has little or no bearing on the demographic pressures.

Skeptic:

05 May 2014 1:16:38pm

If Peter Costello was **so** aware of this happening, then why the h*ll didn't he do something while he was treasurer? Instead of setting up a tax system to take advantage of the mining boom, he gave our stable financial future away in the form of tax cuts and bonuses to buy flat screen TVs for new parents. Instead of insisting on the planned increase in super contributions to 12%, he sat on his hands. Now *that* is surely incompetence on a massive scale.

John:

05 May 2014 2:52:18pm

He did, Skeptic. Go back and have a look at some of the things he said and did along those lines. Do you remember his "One for yourself, one for your partner and one for the country" suggestion? He wasn't talking about buying Holden cars.

The Costello/Howard tax cuts were made from an increasing tax collected figure and were considered a fair and reasonable return to those who had paid the tax after an appropriate amount had been added to Government revenue.

Neither Howard no Costello funded cuts and bonuses to buy flat screen TVs or iPads. That particular bit of lunacy came from the Rudd/Swan cash splash, a splash that included sending (and still sending today) cheques for $900 to people who were dead, people who didn't need it and to people who lived overseas. That was so successful that Gerry Harvey begged them to do it again so that he could spend more billions on importing Chinese and Korean goods. Those Chinese and Korean manufacturers were highly impressed.

That incompetence on a massive scale is why we have billions in debt racked up in only six years that will take us a generation - at least, if not two or three - to repay. Costello produced a surplus budget every time and handed Swan a very tidy little nest egg to squander.

Tiresias:

05 May 2014 10:07:37pm

John, the surplus was smashed by the GFC. Economies were wrecked around the world. The Coalition was lucky it did not have to deal with the situation, although, at the time, they said they too would have spent to rescue the economy. But of course it is easy to say after he event that they would not have spent so much.

Present economic policies emanating from the Coalition are not very reassuring.

Now you are telling us that the debt is largely to do with giving money spent on flat screen TVs and iPads, or to dead people or people overseas. Gosh, must have been millions of them - more than the population of Oz many times over. And no mention of the money spent on beer drunk while watching the TVs?

John:

06 May 2014 8:23:46am

The surplus was not smashed by the GFC. Australia was sheltered, in great part, from the effects of the GFC and we suffered only very little compared to Europe.

The Coalition spelled out, time after time, what it would have done had it been in office. And it would have followed a similar path to the ALP Government - that is, spend to boost the economy. But it would have exercised care, not gone totally bananas. The Coalition planned to make a "cash splash" but with only part of the funds - about one third. Then an evaluation would have been undertaken and a second, and possibly third cash injection would have been made to those areas that had been seen still to be in need of support. This process would have seen the same result as that attained by Mr Swan but with only a small proportion of the funds. The ALP Government went on and on flinging money around with no idea of where it was going and what it was intended to achieve.

But still, the cash splash was a huge bonus to the Chinese and Korean manufacturers of TVs and electronic goods.

There were millions of people who collected those $900 cheques. Have you seen the figures from Greece, for example? You'd be amazed at how many Greek residents still file Australian tax returns and collected those hand-outs.

NZ vs Oz:

D-N-H-F:

05 May 2014 1:04:27pm

I don't see why we can't spread this generosity. Why means test any benefit?

I think every Australian should be entitled to the pension, disability benefits, single parent pension and the dole regardless of circumstances. Means testing is just another iteration of our innate convict derived cruelty.

Jane2:

muzz:

05 May 2014 11:08:29pm

People in America pay a Social Security contribution which was supposed to quarantined from GOVT spending in a trust but instead this was spent to fund the GOVT so instead of being saved it was spent robbing those who paid it in that is why there is a looming Social Security crisis in America

Pete:

05 May 2014 9:49:41am

Yes, but they pay for it. I have read that New Zealand?s overall retirement system is currently more expensive by about 1 per cent of GDP than Australia's. It is said that this gap is likely to increase. The bottom line is that Australian's have far more wealth on retirement than do NZ'ers (despite the introduction of KiwiSaver) because we are forced to contribute.

NZ vs Oz:

Alpo:

05 May 2014 9:12:31am

"We need measures to encourage those on low incomes to put some of their own money away for retirement"... Which money, Steve? I fully agree that apart from superannuation, the worker should also think about doing a bit of personal savings and invest those savings in some smart way to add up to his/her overall wealth. But in order to do that you need to have a personal financial surplus. This is usually produced when you reduce your levels of consumption relative to earnings. But decreasing consumption has got a limit and we can also bump into the limitations of the actual earning power of the individual/family vs the raising costs of living, that may erode the ability to save.

Steve:

The pension is there as a backstop but in another 15 or 20 years will not be able to provide much above a subsistence level of payment. There are too many retired people and not enough workers.

The real savings need to come from people who work reasonable jobs, being incentivised to top up their own superannuation. It's not within reach of everyone, but the rules should make it attractive for those on low-mid incomes to do this because that's where the greatest pension savings will be found.

Gordon:

05 May 2014 12:19:16pm

Which is pretty much what the current system is: people with some scope for long-term savings are encouraged by being charged somewhat less tax on the extra they are putting away than on the part they are spending. The more they put away the less they will draw from the treasury later on, so it all kinda works out. None of this prevents the people who need the pension from getting one so I fail to see what the fuss over super is about.

Even the people who are socking away vast amounts will eventually pay (some) tax on it when it come out and is spent on their fab-o retirement, which OAP recipients will not.

The alternative is the wealthy may as well pay the tax and blow their dough now, and then claim the OAP with everyone else later. Is that what we want?

Steve:

05 May 2014 12:33:43pm

The problem with the current system is that half the benefits go to the top 10% of income earners. These people were never going to need the pension so why would we subsidise them to do saving they were going to do anyway?

Dame Paul Pott:

05 May 2014 3:08:22pm

Are you seriously suggesting that is Gina Reinhart had been born Gina Jones and not Gina Hancock, or Lachlan Murdoch had been born Lachlan Smith they would be where they are today? Lots of us do our best but we'll never be billionaires.

Jimmy Necktie:

Really what you're saying then is that John Hancock should have had to forfeit all his assets to the state, including his companies when he died.

I'm not rich but I hope to be able to pass something on to my kids so that hopefully they can do the same and possibly sometime in the future my descendants will prosper. Who knows, maybe my great-great-great granddaughter will inherit a fortune based on my actions now.

Ted:

The looming bill coming could be kept manageable if super was made to provide an alternative pension instead of lump sums to buy cars and homes, after which you claim the age pension..

The 15% tax break described by Ian advantages the high income earner best, even though they may never rely on the age pension. It is simply a tax avoidance measure. Meanwhile, the arrangement actually disadvantages low income earners who might want to save for their future.

These two problems are staring both LNP and Labor in the face and yet they seem to find it all too hard.

SueB:

"The looming bill coming could be kept manageable if super was made to provide an alternative pension instead of lump sums to buy cars and homes, after which you claim the age pension.."

Agree Ted.

Some deeming needs to be set in place here, so that if lump sums of concessional super savings are withdrawn there is a restriction on eligibility for the aged pension or unemployment benefit afterwards.

However, there should also be the ability to put your super into a home purchase instead of it being compulsorily tied up for 50 years. If the home is sold down the track, those contributions then must be paid into the super account.

Steve:

GJA:

Steve:

05 May 2014 3:17:26pm

I am extremely calm.

You can't wait until a threat is on the border and then expect to buy fighter jets for overnight delivery. This batch won't be here until 2017 These planes are likely to be in service until at least 2040.

23+ Years service for 24 billion dollars seems totally reasonable to me.

Jimmy Necktie:

jennbrad:

05 May 2014 12:42:24pm

When I looked at the figures I was puzzled. It's the hump of baby boomers who stress the pensions system. For a period of time. As they die off the figures return to a more "normal" curve and pensions don't cause budget blow outs. So it's not until the main group of BBs are dead does the increased pension age come into effect.

So what's the point??? It's not "unsustainable" int he long run at all, just a shortish term problem that could be handled in a different way.

Steve:

05 May 2014 5:15:25pm

That's not true.

Yes, the baby boomers coming through are a significant source of the problem but the real source is the extension in average life expectancy. That is not going away (even with the appalling levels of lifestyle disease).

Rockdoctor:

05 May 2014 8:43:43am

"When it comes to government, the trick is to call for a wide-ranging inquiry, preferably one that does not have legal standing, and stack it with a bunch of high profile appointees whose integrity is beyond question but whose thoughts are well known."

Leafygreens:

05 May 2014 8:44:38am

Keating couldn't foresee how the financial sector would gouge a pot of gold?? .. In the 80s it was all about making money. Blind Freddy could see a compulsory scheme was going to attract the financial sharks.

The industry schemes have been the lesser of the evils, and being able to freely choose my scheme has helped, but all those dollars are like blood in the water.

Ive had money reallocated as they change the subplans, money parked, money allocated to another persons account for a year and I didn't get the earnings just the capital (at least they didn't have the hide to charge the fees) and now tax office wants to seize inactive money

And the rise in super is coming out of my remuneration package...

Not going to give me much at the end. After I started with the premises of retiring at 60 and now it will be 70. Women get the rough end of this pineapple and are staring at old age and poverty in their later years.

And not everyone is clever enough to actively manage super money in a tank full of sharks out to protect their meal.

Len Heggarty:

05 May 2014 8:46:45am

Ian,The superannuation system is restricted because of conservative right-wing, small-minded politicians won't let the suparannuation system do what it was intended to do, to keep the aging population off the Old-Age Pension. Enter right-hand side of stage Treasurer Joe Hockey saying the Age of Entitlement is over by slamming pensioners with a $15 tax to visit the doctor. It would be over if the Abbott government let supparannuation rise to 12 percent while employees are working to pay for their own retirement.

Vicki:

Jimmy Necktie:

05 May 2014 4:59:59pm

ahhh but let's not forget soon you won't be a "pensioner" until you're 70 but you'll likely still need to see the doctor in those five years. In fact you're probably statistically more likely to need a doctor 65-70 than you would 60-65.

Oaktree:

05 May 2014 8:46:53am

I hope David Murray shows more probity than that farce of a "Commission of Audit" we have just had. It was interesting to hear Amanda Vanstone railing against any change to her personal pork barrel. Heaven forbid that she should have her free travel removed! Of course, it's ok for the lower orders to have their basic living expenses impacted..... A message to all about the current Liberal Government. It evidently takes the term to mean liberality to its members, and the electorate can go to the other place.

rabbie:

05 May 2014 9:17:55am

Oaktree, I saw Amanda Vanstone being interviewed over her free travel entitlements.

I have never seen her so upset. It is fine for her to recommend real cuts in old age and disability pensions, but take away her large pork sandwich and she wants to go to the High Court to challenge her loss of free travel as a breach of the Australian Constitution.

Abbottpell:

gnome:

Amanda Vanstone- "current Liberal Government"? Try government before the government before the government before the last.

So what did Rudd-Gillard-rudd do about it- did they ever set up a review to consider it?

It won't happen though, because longstanding entitlements are considered "property" under the Constitution, and the government would have to pay "just compensation" if it wants to acquire that property.

Oaktree:

05 May 2014 1:39:19pm

Hi Gnome,

Yes, all governments. But look what has happened in NSW where they went after an admittedly shonky Labor Government, only to end up mired in Coalition slime. Reviews seem to be a "two-handed engine", and it will be a brave Government which institutes any further Commissions or Enquiries, I guess. On that basis, I look forward to the outcome of the Royal Commision into Unions, you never know what will come back to bite Abbott. Months of entertainment to come, or it would be if it did not impact on the hapless Australian Electorate.

Skeptic:

05 May 2014 1:22:21pm

A very good point about travel entitlements! Actually, since we are all living longer - including politicians - why do we still have such an antiquated and open-to-rampant-abuse system that allows already over-superannuated political fat cats to dip into the public purse at will? This is really a scandal of major proportions. Such a shame no one in public life (i.e., elected officials) has the intestinal fortitude to just do away with it. I would vote for that in a heartbeat.

Alpo:

05 May 2014 8:47:07am

If there is a concern regarding the ability of older individuals to sustain themselves after retirement, the solution is simply to:a) Make sure that the People have got a long-term ability to have a job (even multiple jobs, given that the job-for-life old reality is long gone).b) Make sure to pay them a decent living salary at the very least.c) Make sure that there is enough money contributed to superannuation.d) Forbid early withdrawal of money from the superannuation fund. Such money can only be used after retirement.

With regards to pensions, never ever forget that you can't talk about the unsustainability of pensions due to changing demographics without also considering the issues of unemployment, sub-employment and poor pay for the employed ones. Like Government Expenditures vs Government Revenues, you shouldn't solve a deficit problem by just looking at one variable in the equation. The workers won't need any government pension if they have been paid well enough and therefore have accumulated enough money in their superannuation.

-----------------------------------------P.S. Yeah, the fund manager fees are a complete joke, but they become far worse than a joke when your fund is actually losing money due to the ups and downs of the share market. I recommend that when the fund is losing money it is the investor who is paid an "Apology Fee"!!!

Steve_C:

"If there is a concern regarding the ability of older individuals to sustain themselves after retirement, the solution is simply to:"

e) Convince the 'old' to just die.

f) Institute the "Carousel" ritual from Logan's Run if the 'old' won't just die..

g) Start making Soylent Green so that if they must be forced to die they can be of some nutritional as well as economic benefit to younger folks who will surprisingly become old themselves one day...

"Welcome to the beginning of your future's end today!!"

And don't forget Alpo; that no amount of being nice/generous/forgiving or compromising of your own beliefs will make a jot of difference to those who see themselves as not only more worthy of your money; they're also more worthy of everything than you or me... because they're not so weak as to be nice/generous/forgiving or compromising when it comes to getting everything that is yours - or mine for that matter.

Alpo:

05 May 2014 10:14:16am

"because they're not so weak as to be nice/generous/forgiving or compromising when it comes to getting everything that is yours - or mine for that matter."... I agree. But my and your vote are worth as much as theirs... They were voted in, we can vote them out.

Alpo:

05 May 2014 3:09:26pm

Hi hph,As you obviously realise, to change the system is not enough to provide the diagnosis that "it sucks". You also have to provide an effective cure. In my view Labor did get into some policies that address the issue of the cure in a broadly Social Democratic manner. But I also agree that much more needs to be done. As the current Neoliberal debacle unfolds, I would strongly suggest that both Labor and Greens sit down and establish a common broad area of Progressive convergence in policies across all the areas of Government, and then leave each one to differentiate itself on some other areas and details.---------------------------------------------------------------------

P.S. The times of Gough are gone. Back then there was energy, idealism, and desire to get politically involved and shake up the sleepy conservative mind of an old-fashioned Australia. Now there is just general depression, cynicism and disenchantment towards politics, as too many believe that politicians are not seriously trying to solve the People's problems.

Steve_C:

There used to be a difference. Now the cookie jar is the target, it doesn't matter which gang of thieves one elects into the position with the best chance to raid the cookie jar.

The simple fact of the matter, is that you can be sure the cookies won't be left in the jar once those with a plan to make sure they're A-OK get their sticky little fingers in beyond the lid.

The shonky used car salesmen/saleswomen are finally in charge. The naive who can't bring themselves to admit what is right before their eyes will of course still hang onto that most forlorn of human emotions - hope... because they just can't let themselves see their fellow human beings as being that nasty, that corrupt, that obscenely venal and greed motivated; let alone that deceptive as to pretend they aren't "all that" when their actions demonstrate they are.

It's OK Alpo to hang onto forlorn hope.

It almost worked for all those Christians of Europe who faced the invading hordes of Islam at the time of Charlemagne... hanging on to some hope that a miracle or continued faith would turn the tables without their needing to actually do anything beyond having faith, that is.

Now if only there hadn't been christian pragmatists back then, we'd probably be needing to stop for prayer and find Mecca's direction during the writing of these posts - that's if we would be allowed to write them in the first place...

Alpo:

05 May 2014 7:35:11pm

Steve, my bottom line is this: I am more than happy for Progressives who are disenchanted with the current shape of Labor to vote for the Greens. I don't even mind at all a vote for a Progressive independent. That will send a clear message to Labor to put their act together even better. But what it is also clear to me is that the current Neoliberal mob in Government are the guys to truly get rid of: For the sake of the Country and for the sake of the Liberal Party itself.

Skeptic:

05 May 2014 1:24:21pm

Just one fly in your ointment re jobs: what jobs? Unemployment among the young is running at 30% in some states. Do you honestly believe that there are enough jobs out there for the semi-retired, too? Please, get a grip on reality!!!

Alpo:

05 May 2014 6:27:26pm

Skeptic, I agree that we have a serious issue of unemployment and youth unemployment is reaching a critical stage. Yet we have tens of thousands of people coming on temporary worker visas to work for ridiculous salaries. To be frank, I can only see the situation getting worse with this Government.

Tator:

05 May 2014 8:48:38am

Ian , Three points to remember about superannuation, firstly, the tax system when it comes to super is designed to provide for retirement benefits and not wealth redistribution. Keating designed it this way as he wanted income tax to be the wealth redistribution method and not super.Secondly, with an understanding of demographics, the vast majority of people in the top tax bracket are those who are in their peak earning years(albeit a very small minority of taxpayers as well) and are approaching retirement so this benefits them as they can maximise their retirement benefit as many who are currently approaching retirement have not had a full working life of super contributions to support them in retirement. I would also add that the vast majority of those in the second top tax bracket who pay 38.5 cents in the dollar, also receive a much better deal than those on the lowest bracket and the same demographics work for them too. Demographics and ATO stats show that generally lower income earners are younger people who have a whole lifetime of earning ahead of them and most will gain the benefits of at least the second highest bracket as they approach retirement so they get their turn obtaining these benefits as demographics show that the vast majority of peoples income never remain static but increase over time as they gain skills, qualifications and experience.Thirdly, with only $25k being eligible for the 15% tax rate including the SGC of 9%, anyone over $278k receives no additional benefit whatsoever and someone on $80k can only put in an extra $17800 a year and that decreases as the income gets higher as the SGC gets higher.

NZ vs OZ super:

05 May 2014 9:00:32am

Just a laymans question: why couldn't Australia have had the superannuation scheme they have across the Tasman in New Zealand? Everyone gets a pay out of super. My parents are of NZ origin and are retiring there soon. They will get BOTH Australian and New Zealand super, regardless of the fact that they haven't lived there for nearly 40 years.

Why is it so simple and straight forward for NZ but so complicated for us?

The Jones Crusher:

I have some super spread around the place. Two large lumps with two big names and my own SMSF. The two "managed" funds have ALWAYS underperformed the market and have ALWAYS returned less than my self managed fund. I charge myself a nice bottle of red once a year as a fee for being a better fund manager than the "professionals".

gnome:

Skeptic:

05 May 2014 1:27:25pm

Unfortunately, not everyone can do this. You are very fortunate that you have the talent to make your own money by your own cleverness. This is why there needs to be transparency in both the activities undertaken by those who invest money on behalf of others AND the fees they charge for supplying this service.

DG:

Super funds don't invest with long-term horizons, in areas such as infrastructure and alternative investments, because the regulatory environment makes this very difficult.

The Future fund has no such constraints.

If you think Murray was ever going to do anything about it, you're sadly mistaken. While super funds generally run very lean, the fees go to investment managers; a large portion of which are banks or bank owned. Why woud Murry want that to change?

din ohtar:

05 May 2014 9:17:05am

Ian left out a little bit of info, the amount of money at 15% is capped to, I think, $25k a year, and that includes the contributions from your employee - which would be a decent amount if you are on the upper pay level.

Exceed that, and you get tax at your personal tax rate plus an extra interest charge.

Ian implies that those on the upper pay levels are dumping huge amounts of money at 15%, but that's not true.

But go to the upper pay levels and the story is vastly different. For every dollar you earn over $180,000, you pay 45 per cent tax. So there is a good incentive to stow some of that cash in super at 15 per cent tax, as it delivers you a 30 per cent tax concession.

Gordon:

05 May 2014 12:13:13pm

If you tax super as the same marginal rate as income you remove the immediate incentive to save, and also you reduce the amount going into the super pool. You will simply expand the number of people who will, at some point, need to draw the age pension.

Fees and commissions do need to be worked on, by making them more visible, and by making super easier to move between funds.

tsjj:

05 May 2014 9:17:39am

The superannuation system only really works for those who are either highly paid and who contribute regularly to their fund, and who also keep regular checks on it. As a set and forget scheme, (which I suspect an ignorant or trusting public mostly does) it is flawed. And for the self-employed or part-time worker - or the long term unemployed or the carers, stay at home parents and those on disability pensions, it is a useless idea from which they will reap no benefit.

This is a scheme that creates more future wealth divisions -- a worker's fate often decided by his or her employer at the time of allocation to a particular super fund, and its performance over time.

This scheme has been undersold to most Australians and certainly under delivered. Education about how to manage our finances - now, and into the future should be a priority government initiative to enable the improvement of the management of our earnings, investments, and our super and thus our retirement years. This would be money better spent than buying fighter jets or paying the already well-off middle classes to have babies.

gbe:

05 May 2014 9:20:34am

Compulsory superannuation is a benefit to those such as public servants in permanent long term employment.

But to the millions who are casually employed and go from job to job as is the normal practice now days it's nothing more than a letter from some obscure company advising their meagre nest egg has gone in fee's.

GJA:

Skeptic:

05 May 2014 1:32:14pm

You can set up your super with one suppler if you take the trouble. But sometimes, it is just too hard. I have been through the process of consolidating my super from four providers down to one. The paperwork was quite challenging but it just had to be done. I had left doing this for too long, unfortunately, and some of the money from the smaller accounts is just gone. I only I hadn't also had to pay tax on my contributions!

Maynard:

05 May 2014 9:22:50am

Like the curates egg, there is much to agree with in your article but let's get one thing straight St Paul foresaw everything except the failure of the rational theory of financial markets.With superannuation especially the government has a major dilemma of short term cash flow shortages that has got us to the current unholy mess. All inputs to superannuation during the accumulation phase should not be taxed. All payments from superannuation should be taxed at the appropriate tax rate applicable to the relevant tax bracket. This ensures that there is no double taxation of savings. However the government cash needs require it to tax inputs.Next the Future Fund. This was established because much public superannuation was not funded at the appropriate time. The taxpayers liability federally is about $150Bn & probably $300Bn Australia wide. Now this superannuation scheme is financially unsupportable without ripping off all taxpayers off. It must be reregulated especially for politicians & the liability halved. Savings $150Bn.Now the Banking Deview. Banks have a government guarantee wether we like it or not. If a bank falls over then within 5 days the Australian economy would be at risk due to inter bank indebtedness ie all banks are at risk. This enables the banks to be an oligopoly & obtain oligopoly or super profits. These super profits should be taxed under capitalist economic theory. Benefit about $11Bn/annum. You touch upon superannuation relying on financial markets. Now I agree with you & not even St Paul anticipated the failure of financial market theory based on the rational market which like much economics is plain wrong. Indeed Keynesian economics properly understood foretold this problem in the 1930s. Although risk can be covered to some extent by insurance, uncertainty cannot. ie only God can foretell the future not financial markets, so all this money invested in financial markets could make us paupers or zillionaires & this applies to Norway's future fund & ours.

Alan:

05 May 2014 9:24:00am

Given that we all should accept that there is a need to repair the budget, reasons open for debate in another place, the super process needs to fixed so that when you pay in $1 it earns market rate or just short of it.

Fees should only be levied after a fund earns greater than 5% higher than the market rate and those fees should be fixed at 5cents in the dollar earned over the 5% over amount, perform or no fees.

The other option is to allow the general worker population to pay into the future fund. this would then provide the government with a ready source of investment capital for use in infrastructure. This would need to have legislative embargo on the amount available for use in each budgetary period.

As for the tax opn super, if there was a 10 or 15 % flat rate tax on gross income whether it be from salary, wages, subbie payments - gross profit for ALL companies australian or overseas based - then most of the issues would disappear!

GJA:

hph:

05 May 2014 11:27:25am

I know some people who lost 20 to 55 thousand-dollars from their superannuation funds during the GFC.

Workers' superannuation funds should have been invested in government-owned oil, gas & mineral mining companies and utility and telecommunication companies rather than placed in the hands of the traders -gamblers- here and Wall Street.

Then again, irrespective of which party was in power, the governments around Australia privatised almost everything.

Gordon:

I'm sure that's true, but what you are describing is not Hidi's statement.

"nothing more than workers being forced to give pay increases to companies that gamble on the share market".

The statement is simply false: -APRA regulates how much super can be invested in shares.-Many super funds are not for profit.-"Nothing more than" suggests a universal fraudulence that is just not unsupported - super works reasonably OK for most people.

Some people need help claiming payments at centerlink: it keeps an army of staff busy helping people fill in forms. This indicates a problem with administration (and education) not that the system is corruptly benefiting someone else. Probs with Super for low-paid, low financial literacy people fall in this category: stuffups not conspiracies.

If low-paid or itinerant workers super can be rounded up and put in a lower fee structure fund I would be the first to cheer and say good move. I certainly don't mind if the tax benefits at the top get pruned some - but destroying all incentive for middle-income types to save long term will put us backwards not forwards.

WA Ideas:

05 May 2014 11:45:57am

"I think most Super contributors might take the 257 bn profit when you see some of the disasters world wide.."

You've missed the point there though... of the $300bn in growth, most of that is the compulsory 9% contributions from employers and voluntary contributions to funds from members, not acctually profit made by the fund managers.

The issue is that with fees charged according to funds under management, the fund managers can just put your money in term deposits and wait for your compulsory contributions to come in each year and their fees go up by another 9% for that year from doing SFA!

Changing the fee system for superannuation to a performance based fee with a nominal administration fee would be much better so that the fund managers, as well as the members of the superfunds, will have to take the good with the bad!

MACK1:

Skeptic:

05 May 2014 1:37:15pm

Yeah, I highly doubt that anyone in the finance industry spends more time working on my super investments than for Joe Blogs, who might happen to be my boss and earn more money than me, if we are both with the same super fund! Flat fees for standardized services - heck yeah!!

aidnuff:

05 May 2014 9:43:25am

There's a bigger picture here that most of us are missing. Consider, firstly successive govts have restricted the amount that can be put into super. Secondly, they've increased the retirement age and also probably increase the age at which you can access your super. Thirdly, Hockey has now said govts WANT people to work until they're 70. Now add up these three moves and one can see that WANT doesn't come into it because you'll never accumulate enough on which to retire and you'll never get an age-pension until you're 70! See how it all dovetails together?

True Blue Ozzie:

05 May 2014 9:43:43am

It's plain out right wrong when governmnts make the rich suppers even bigger, and leave the poor with no government supper support only to get poor and poorer by the day. Many in the low income bracket have been taking for a ride, by unscrupulous employers who have never paid there employers supper intitlemnts, and in the eary days got away with not paying them !It was another case of the rich gouging the poor, and many of us face blreak retirements, kowing we've done the best we can with what we get to plan for retirement, but it will never be enough !

Out in the burbs we know there is already a class " of working poor " people because their wages are far to low and Abbott dosent give a dam. I wonder how many out there voted for this clown, thinking hd lift up there life, only to now realize he plans to screw them over at the end of the day.

I follwed my gut extinct and never voted for Abbott, I jut knew he was not right for Australias future at this, and history will prove me rigt.

RobP:

"At the time, Keating was convinced the private sector was the most efficient way to manage the retirement savings of ordinary Australians."

=The great reformer was also a great dope. Or, to be pedantic about it, a great nong.

"Ironically, that view wasn't shared by John Howard and Peter Costello, staunch advocates of small government, when they established a centralised, government sanctioned super scheme for public servants, the Future Fund."

Sorry, but why is that ironic. Maybe Howard and Costello knew a thing or two about who and what they were dealing with in the private sector. No wonder Howard was rapt that Keating did the economic heavy lifting: because he (JWH) knew that he didn't have to do it himself and therefore could afford to take a less risky course.

Tory Boy:

05 May 2014 9:53:22am

Nothing will happen; both sides are too wedded to the rort that is superannuation. It will need a politician\party with far more guts than the rabble we seemingly have representing us at present. It should be voluntary; it should be between 0% and 15% at each workers own discretion. I would choose 0%; my own savings and investments have done far better than the countless super funds I've been forced into over the years.

Pth:

But there is an adjunct to that statement - even if, hypothetically, the "market" made a 9% return, if a trader makes a 8% return, that's called "underperformance". But compared to investing it in a cash (let's call it 2.5%) or relying on the government to give you an indexed pension, that 8% isn't actually all bad. It's not that "underperformance" got you nothing.....

I don't disagree that fund managers charge high premiums for managing money, nor that the infrastructure running super is expensive, but over the lifetime of a person, an 8% year-on-year increase is actually pretty good.

There is clearly room for reform in determining the best fee for service in funds management world and this is happening, to an extent, due to consolidation. But not expecting the private sector to profit shows a degree of naiviety - do we expect construction companies to build infrastructure from the goodness of their heart? A fee for service for funds management is the same as the "builder's margin", folks!

mikemwa:

Benjigy:

05 May 2014 10:04:45am

Our super system is the envy of the world. Stable, 'self' funded, no black hole of unfunded benefits. If it is such a gravy train, why doesn't Virgin, ING, AustralianSuper etc undercut the banks and take a big slice of the massive pie? Oh wait, they are trying, but, it costs a lot to offer super and to comply with the massive amount of regulation. Maybe Grattan should have looked at the regulatory costs?

Mike (the other one):

The photo caption says it all - I could see it, my wife could it and many of our family and friends could see it, so why couldn't the highest ranking politicians in the country see it?

No wonder we and many other Australians see our politicians as nothing more than nation wreckers - something akin to administrators and asset strippers brought in to manage a fine healthy business forced to the wall and then looking after their mates at the top end of town first.

Professor Rosseforp:

05 May 2014 12:13:46pm

"What he didn't foresee was the extent to which his grand vision would be plundered by an industry that continues to enrich itself at the expense of those it was meant to serve" -- like Mike (the other one), I beg to differ. Even if he (our so-called greatest Treasurer) couldn't figure it out, everybody else knew, and everybody else told him.Please, don't stretch our credulity.He was told, and was told frequently, and was told by many.

Rob:

05 May 2014 10:19:36am

'The trick is to call for a wide ranging inquiry" It is what Governments do when they either seek to divert attention or to justify their policies.And this Government, which was so vehement in its criticism of the previous Government for "outsourcing" has more inquiries ad Royal Commissions than any other in history-all this at at time when we are supposed to have a 'budget emergency"The trick with the LNP ia all about tricking us and as Ian suggests. maintaining the status quo of the cabal between Governments and its financial backers.

The terrible mistake Keating made was in not insisting that as with all super was administers by Government agencies as in in Singapore and Norway.With apologies to Jon Stewart for misquoting him I ask ' In whose delusional mind is democracy, the economy or equity made better by allowing vested interests more control over them"?An LNP mind perhaps?

Tony Gurnett:

05 May 2014 10:20:07am

I have a single example of "how easy it is to make literally millions" out of being a player in the "Super Cash Grab"!

Having worked for a while in the IR industry I started to notice the resignation of "union officials" so I wondered, where were they going to work? Many were long term "good lefties' of the old Miscellaneous Workers Union and the Liquor Trades (now amalgamated).One official told me a friend of his that was an official (senior position) near twenty years was leaving to work in a company (superannuation) with a former ALP politician (state) Lovely...I think it was Neville Wran's old seat of Bass Hill? My understanding was that this group (mainly high school graduates) were to encourage movement of members superannuation to a competing fund. This all occurred around late 90's early 2000's...this venture has been very successful for the former union officials...all "multi-millionaires" today!

As has been written, no capital outlay or vast management skills...a nod and a wink via the union network, just a small example of where some of the "Super Fees Go" similiar to ICAC...the politics of money has no party or class boundaries?

RobP:

05 May 2014 11:03:52am

At some point, I reckon there will need to be an audit of what union officials have done for their money.If not on this earth, then in the beyond.

In the spirit of proceeds of crime legislation, they should be asked to account for their millions.How can they possibly be paid that when the members are often paid a pittance?Yuk, the hypocrisy is horrendous.

RobP:

05 May 2014 12:18:24pm

"The politics of money has no party or class boundaries"

That's pretty much what Mark Latham said on an episode of Q&A a couple of years ago. He said that the division where the real inequality is, is between the insiders and outsiders. Not Left vs Right nor Labor vs Liberal. While Latham is a king of political biffo, he's got a first-class political brain and his comment totally nailed it.

"it is the "system" not the economy which is corrupt"

I agree, the political system has an ingrained bias where our intellectually smarter overlords are recompensed for largely being in stand-by mode and just maintaining the status quo. This activity is part of a barrier to the ordinary public and an overlay on the economy, just like the false metal cover that scamsters put over ATM dispensers years ago, which harvested the money without the drawer ever seeing or receiving it.

blax5:

05 May 2014 10:28:45am

I never believed that the superannuation system would keep the oldies off the pension. If you look at the sums that need to be accumulated by individuals, in addition to buying a roof over your head, raising, educating children after you have paid off your own education it should be clear that this cannot be done by the vast majority of people, not even when they decide to live on rolled oats and water all their life. Having no children is a help but even that doesn't solve the equation either. I have always seen it as a bit of help for the public purse. Somehow the system needs to be adjusted to the realities that exist. The undercurrents from business to lower wages is counterproductive here, because lower wages produce lower superannuation contributions. Some wages are so low that people cannot make any additional savings from them, rattling the equation even further.

Jane2:

05 May 2014 10:52:11am

Question: How many people who are earning less than $18,000pa are putting anything, including the mandatory part, into super? $18,000 is full unemployment benefit plus about $80pw of income. If they are geting compulsary super it is roughly $7.20 pw or $374.40 pa. The labor $500 "tax refund" was 10 times the amount of tax that someone on that level paid and over twice their. Why bleat about unfairness when those its supposedly unfair too are not impacted because they are not earning any money in the first place?

Professor Rosseforp:

05 May 2014 12:18:51pm

I'll tell you that many business people and big enders (including some politicians?) have their wives on the payroll, earning just under $18,000, and putting money into super -- including the extra money that the government provided (tax-free) on a dollar-for-dollar basis.The government co-payment was designed for these people, not real low-income earners.

RobP:

jeorg wmd busche:

05 May 2014 10:58:49am

Pity super wasnt introduced many years earlier and administered better. I queried a super rep why we were bombarded by glossy coloured literature, at our expense, she replied it was a legal requirement to keep us informed.A simple letter would have done this. There were many other fees, commisions, and other chargesthat kept "savings" static for many years. Then the killing blow, on the eve of retirement the ex wife came for her cut, financed by the ever benevolent gov, add insult to injury, I had to pay half the cost of that transaction. I queried my lawyer on reciprocating, he told me he would be the only winner there, a good man my lawyer, you dont see him posting drivel under professional guise.

Jon:

05 May 2014 11:15:58am

If you've traveled, changed jobs, or relied on employment other than "Permanent/Full-time", you are unlikely to have much Super.

No matter how much you may have earned, and how huge the Taxes you paid over the years, the Old Age Pension is scary, in how Tiny it is. Combine that with the costs of illness/decrepitude, and "Voluntary Euthanasia" starts to look appealing!

This wasn't how we imagined it would turn out, when we were wincing at the size of our Tax donations under Malcolm Frazer. "Don't worry, you'll get a very comfortable Pension, when you Retire. . " Oh, Really? .

graazt:

05 May 2014 11:19:43am

Welcome to the world of moral hazard and captive markets. And the Audit Commission now recommends that high-income earners be required by law to take out private health insurance. Another sector of parasites who get business by government fiat.

Don't hold your breath seeing a banking spiv eliminate this gouge; nor their lackeys in governments. Some people are setting up their own super-funds to get around them; but that has its own risks.

The Jones Crusher:

blax5:

05 May 2014 1:30:53pm

This is against worldwide trend. They love it, that hand to mouth taxation. In the early seventies my then tax accountant in Frankfurt (Germany) told me 'they' had plans to bring the GST up to 25 % and abolish income taxes altogether. Imagine my surprise, when my Adelaide accountant told me the same thing - maybe 25 plus years later. Who is 'they'? The IMF, Bilderberg, the UN, the World Bank, the WTO - got no idea where that nest is.

Frankie93:

05 May 2014 11:54:46am

I am a farmer and I would like to clarify some misconceptions on the diesel fuel rebate. We only claim off-road use of diesel, not diesel used by vehicles on road. The majority of diesel is used on tractors and headers. The diesel used to deliver grain to the bin is on road and rebate not claimed. This is the only "subsidy" Australian farmers get, as opposed massive subsidies to American and European farmers with whom we compete. As to the misinformed person who said that farmers can just add the cost to the price of our products, as a grain farmer we are price takers subject to the market and the high AU$. We look at what grain buyers are offering and take the best price. We cannot just add on costs, same as when we have a drought, we don't get more for our grain because we grew less.

hph:

05 May 2014 12:07:31pm

I knew it from day one when this forced superannuation fund scheme was announced, that, it was never going to be for the benefit of the workers. I knew that the money would diminish if left in the hands of the private sector.

It would have been much better if the funds were deposited in a government-guaranteed bank account until the time of the retirement of the workers.

The Jones Crusher:

05 May 2014 12:43:54pm

Agree 100%

Compulsory superannuation should be held in a sovereign fund and protected by the government. It's what happens in most European countries, but if the same thing happened here the 9% contribution simply be labelled a "tax" by the LNP and IPA. However, even though the 9% is compulsory and most workers are forced by an act of Parliament to hand it over to the private sector who simply stuff it in their pockets, it is not a "tax".

Paddy:

05 May 2014 12:49:25pm

45 years ago, an aged enhanced Dutch miner I was working with in a underground mine (making good money at the time) said to me "listen young fellow each month buy a gold sovereign - and put it into a bank safe deposit box then sell one a months when you retire" - wish I had taken his advice

micka:

FlapDoodle:

05 May 2014 1:20:17pm

The Conservatives know what they want to do. They just lack the gumption to do it flying solo. They corral a herd of like-minded political supporters from the big end of town to write a report, the content of which is already known by both the reporters and their client.In the end the Budget will be delivered with features which were "forced" on the Conservatives by their predecessors actions and by the good sense of their well-connected reporters who, as the leaders of large corporations, must know what's good for them.

The Jones Crusher:

05 May 2014 1:45:33pm

FlapDoodle.. The LNP government has rolled out a commission of audit and also a Financial System inquiry. I think you, like most people, are confused about the master and servant aspects of these commissions.

Tony & Co are just doing what they are being told to do by the big end of town and are just trying to dress it up as being legitimate...

hph:

Jocks Trap:

05 May 2014 1:48:15pm

As a self managed super owner I can tell you all it is not that hard to do. Minimum you need in super to start is $100,000.00 be that individually or as a couple, the one off cost to set up $2000.00. Annual running costs $1000.00 now that is less than some of the funds charge in fees over the year so you maybe in front straight away,use a broker to buy shares that pay a fully franked dividend, this is because they pay 30% tax but super pays 15% so the government owes you money that is then deducted from the tax the super is going to pay on earnings, split your super up into 3 groups of investments Property, Shares and Bank accounts (term and cash accounts). DON'T "Play" the share market get good solid shares. If you own a business let the super buy the property it runs from(NOT your HOUSE) you pay rent to your super, Now there is no regulation on how big the rent is you have to pay but it should be above the going rate (the business gets a tax deduction 30%, super pays 15% Tax on earnings) and this is not counted as part of the $25,000 contribution limit. Go on give it a go talk to your accountant and play the Bastards at their own game and cut out the fees and stay away from Fin Planners

Reinhard:

05 May 2014 1:50:00pm

The first rule of neo-con politics, never start a review (or royal commission , or commission of audit) unless you have already determined the outcome and recommendations.To that end I am sure that ex Commonwealth Bank CEO Murray will be just as impartial towards this review of the Banking Industry as he was during his review of James Packer's Barangaroo Casino development proposal, and when he hosted a Liberal Party Fundraiser at his home last April Reading the SMH this morning I was appalled (but not surprised) to read that the Financial Services Council are major contributors to Joe Hockey's "North Sydney Forum". Ref: "Treasurer for sale" SMH 5th May

The Jones Crusher:

Bemused sceptic:

05 May 2014 3:15:33pm

Except the Future Fund is not the public service super scheme. It will eventually fund payouts but they are at the whim of the market just like others. Indeed my balances in the public service fund crashed just like those in the private sector during the GFC. Also there are much fewer investment options in the public sector fund, cash or balanced. So Mr Costello was right to fund future liabilities but did not affect the fund. Many other things he did with super may be deeply regretted by Governments one day.

David:

05 May 2014 3:54:23pm

No taxing miners for diesel used in vehicles ' unless the vehicles are used on roads??' wtf? Mine vehicles are seen on roads everyday in shopping centres and main roads, where I live, are you telling me the miners don't use fuel from the mine pumps at the mines to fuel these vehicles? come on it is a rort. No different to the FBT, how many use their cars only for work? The Commission of Audit, or the report to permit the plundering of everyday workers and members of the public, of school funds and health care money, and pension funds conveniently avoided, recommendations to increase any rebates on diesel or any other taxes or charges on big business or banking in other words the ' meal tickets ' for the Liberals, hidden slush funds and National Party backers are to be left alone, this premeditated report was supposed to usher in and help the government change and fix the ' so called budget emergency' what a folly, a propaganda tool it is. Permission to fool us, rort us, con us and deprive us. While the miners, bankers and corporations make hay, and we poor citizens and masses bleed dry. Oh the adults are in charge and the chosen ones eat strawberries, while we eat slops and are supposed to thank Abbott for the privilege.

Just anuva Lawyer:

Superannuation is a good concept whereby employers contribution are forcing you to save for the future,however, many people do not check the funds small print or even care about the policy.

Here is an example of gouging by the policy holder, firstly are people aware that fees are deducted for life assurance and also loss of income insurance and unless you opt out these fees will be continually deducted, that is why people who change jobs and have a number of different policies must immediately opt out of the insurance options and when changing jobs consolidate your money into the best performing Superannuation company.

Life assurance is basically you insuring yourself to die,why do people think this is a good thing when your super is for you to live and survive after work, sure you can have a small policy that will pay off your mortgage and protect your spouse if you should die but be wary of this gouging!

These are very simple things to do but I am amazed at how stupid or lazy some people are and are prepared to let things slide along whilst their money is being eroded, basically stolen by the fund because many people don't care.

hph:

05 May 2014 5:44:57pm

Well, I have news for you Anuva Lawyer. If everyone understood every little detail in every small print in every contract or agreement then we wouldn't need lawyers in the first place. You should thank your lucky stars that we are not as smart as you are and the language set up in those contracts and agreements cannot be interpreted so easily by the "stupid or lazy" people (your words, not mine), so that you and those fund-managers can go on making a living on the back of the workers...

Just anuva Lawyer:

05 May 2014 8:17:19pm

hph,

If you are prepared to stick your head in the sand and not become informed on anything, or read the contract on even a mobile phone contract then you are sure to lose money , and if you cannot read give it to a mate to read.

Time to read a contract costs nothing, you can even ring your super company and get them to explain it.

John51:

05 May 2014 4:46:32pm

Ian, you have framed the issue very well. As the idea was framed by Keating and labor originally the schemed has failed. It was meant to reduce if not replace the reliance of people on retirement on the old age pension. It was also supposed to reduce the increasing cost of the old age pension on the budget.

In both of these it has failed badly. As you described the superannuation tax subsidy towards superannuation favours the highest income earners and provides little if anything to the lowest income earners. This means that it failed in its first job of taking pressure off the age pension cost to the budget.

But the scheme's failure, made worse by Howard's changes was even worst than that in its impact on the budget. That tax subsidy is now exceeding the cost to the budget of the aged pension itself. Even worse it will cost to the budget will increase at a greater rate that the cost of the aged pension on the budget.

But the failure of the superannuation scheme is even worst that that. And that is because most this tax subsidy cost to the budget is going to people who would never have been applying for a pension. Or, at most they would have at sometime only ever allied for a part pension.

So in the end this superannuation pension has been funding the retirement of the most well off. Those who would have been applying for a pension will be still applying for a pension. And in the meantime we have this double hit on the budget of the aged pension and the superannuation tax subsidy.

Wow, that is some policy failure and that is why people are going to have to work until 70. Or, they will have to live off what super they have until they are 70 and old enough to apply for the aged pension. And neither party is willing to deal with it. When labor tried they got cried down for class warfare when in truth the class warfare is against the lower income groups. This is the greatest wealth transfer to the rich we have seen in this country.

Paul Taylor:

05 May 2014 5:11:51pm

Under a fascist, far right Coalition government economics is no longer a moral science; economics is completely separated from ethics. With the repeal of the carbon tax the tax free threshold will revert from $18,200 back to the former $6,000 & with it an increase in up to a million extra people who will have to lodge a tax return. The rich at the other end of the scale will see their revenue perks fully reinstated. Ian you can forget about a return of equity to the superannuation system or the removal of tax concessional bias!

In the neoliberal construct, assumptions in economic modelling which dominate the 2013 MYEFO & the upcoming 2014 May Federal Budget are used to reconstruct economic reality based on maintenance of the status quo projected 10 years into the future with a budget & debt emergency predicated on a do nothing worse case scenario.

There is a lack of vision in contemporary economic theory. Quantitative, mathematical economic modelling (econometrics) is only as good as the assumptions & listed contributing variables/ factors upon which it is based eg. the Coalitions budget black hole reported after the September 2013 federal election. Federal election policy should not directly follow from models but from combining models with qualitative analysis based on knowledge of the institutional power base, intuition & common sense.

It makes common sense to look at revenue raising apart from increases to taxation & the impact of DRACONEAN cuts to expenditure in areas that underpin future productive economic growth.

Intuition to me, suggests if Labor are to win the next federal election then they have to go far beyond keeping the Coalition to account on their promises before the September 2013 election; in addition that the pain offers no gain to the greater bulk of the community, that elements of the institutional power base have been either directing change for personal gain & not in the national interest, corrupted in their ability to act impartially or driven by fear of retribution.

Paul Taylor:

Paul Taylor:

05 May 2014 5:13:02pm

We have Coalition, federal & state governments dominated by climate change sceptics that ignore not only the economic impacts of global warming but also of carbon pollution......with their privatisation agenda subverting environmental concerns what are they prepared to give away in signing a Pacific Partnership Free Trade Agreement that potentially could turn a private asset into a public liability involving compensation. Without the need for hindsight should not we be following the Future Fund investment scenario & investing a greater proportion of our super fund investments in areas such as national infrastructure & alternative sustainable investments that do not suffer from the whims of the stock market; linking tax concessions & tax rate brackets to the quantum of investment.

If David Murray does not support the former Labor Governments Future of Financial Advice legislation then there is little chance of further reforms that curb the excesses of the banks...like the Joe Hockey nine point plan prior to the September 2013 Federal Election.

Nobody:

05 May 2014 5:36:55pm

Another example of a govt initiated "inquiry" designed to endorse a political agenda and reinforce the status quo. There's 2 points that occur to me: 1) So-called financial "professionals" need much closer scrutiny and oversight. Last year my super fund returned about 10% growth, while my own investments returned about 30% growth. These people are at best overpaid amateurs, at worst, thieving criminals. Or maybe I should seek registration as a fund manager. 2) The structural problems of Australia's economy won't be resolved by tax increases/tax cuts or by spending increases/spending cuts or by overhauling the pensions/super "industry". Until zero output "industry" shrinks and production-based industry expands, such measures are just fiddling at the margins.

Paul Taylor:

05 May 2014 5:44:04pm

Under a fascist, far right Coalition government economics is no longer a moral science; economics is completely separated from ethics. With the repeal of the carbon tax the tax free threshold will revert from $18,200 back to the former $6,000 & with it an increase in up to a million extra people who will have to lodge a tax return. The rich at the other end of the scale will see their revenue perks fully reinstated. Ian you can forget about a return of equity to the superannuation system or the removal of tax concessional bias!

In the neoliberal construct, assumptions in economic modelling which dominate the 2013 MYEFO & the upcoming 2014 May Federal Budget are used to reconstruct economic reality based on maintenance of the status quo projected 10 years into the future with a budget & debt emergency predicated on a do nothing worse case scenario.

There is a lack of vision in contemporary economic theory. Quantitative, mathematical economic modelling (econometrics) is only as good as the assumptions & listed contributing variables/ factors upon which it is based eg. the Coalitions budget black hole reported after the August 2010 federal election. Federal election policy should not directly follow from models but from combining models with qualitative analysis based on knowledge of the institutional power base, intuition & common sense.

It makes common sense to look at revenue raising apart from increases to taxation & the impact of DRACONEAN cuts to expenditure in areas that underpin future productive economic growth.

Intuition to me, suggests if Labor are to win the next federal election then they have to go far beyond keeping the Coalition to account on their promises before the September 2013 election; in addition that the pain offers no gain to the greater bulk of the community, that elements of the institutional power base have been either directing change for personal gain & not in the national interest, corrupted in their ability to act impartially or driven by fear of retribution.

Paul Taylor:

05 May 2014 5:44:54pm

We have Coalition, federal & state governments dominated by climate change sceptics that ignore not only the economic impacts of global warming but also of carbon pollution......with their privatisation agenda subverting environmental concerns what are they prepared to give away in signing a Pacific Partnership Free Trade Agreement that potentially could turn a private asset into a public liability involving compensation. Without the need for hindsight should not we be following the Future Fund investment scenario & investing a greater proportion of our super fund investments in areas such as national infrastructure & alternative sustainable investments that do not suffer from the whims of the stock market; linking tax concessions & tax rate brackets to the quantum of investment.

If David Murray does not support the former Labor Governments Future of Financial Advice legislation then there is little chance of further reforms that curb the excesses of the banks...like the Joe Hockey nine point plan prior to the September 2013 Federal Election.

Paul QUIRK:

05 May 2014 9:28:14pm

Changing Tax concessions on super & fixing the deficiet.

Many have commented on the biased nature of the tax concessions on our supperanuation contributions. Most?all of the projected Budjet deficiet for this year and next can be wiped out by all Australians making a simple sacrifice for one -two years.GIVE UP THE TAX CONCESSION ON OUR SUPERANNUATION CONTRIBUTIONS FOR ONE or TWO YEARS.The onging projected debt can then be eliminated by stopping the tax concessions for the supperanuation contributions on the top 10% of income earners.If we make any other sensible savings on expenditure, or other tax concessions we could actually be in surplus in 2-3 years.

razget:

05 May 2014 10:30:15pm

Good article in that it pulls the lid of the incomplete and unfair nature of our current system.

Not only do the funds charge too much but the government taxes 3 times and at a flat rate which penalizes low income earners and favour high income earners and at the same time penalizes everyone with more red tape.

Its a nonsense that the government keeps increasing the rate of sgc super, which is a cost to business to administer on behalf of workers. Its a nonsense that the government dips its beak at the money on the way in, the profits generated every year and then when the money comes out.

If Australia was serious about making it SUPER-annuation...instead of just compulsory annuation...then they would tax it once on the way out...at a higher rate if the system is hurting...but it makes no sense to damage the interest compounding power of the investment by removing cash on the way in before it has a chance to do anything.

The government also forgets that it is trying to incentivize people to save for their own retirements, instead of relying on the old age pension...so they have to do something to make it more attractive. Getting taxed to buggery and then saving is what we all have to do anyway...but if you want people to really save...and build up $2million for a comfortable retirement they have to provide incentives.

Its convenient for them to label the incentives as concessions...they most assuredly are not concessions...they are more like realities. The reality is clear that super has to be reformed.

As Ian points out...its ridiculous that someone earning in the tax free or 1st tax brackets should be paying compulsory 15% super tax on the contributions...its madness...politicians are asleep at the wheel when the crow about how big the concessions are but allow such an unfair disincentive to continue.

Trying to means test someones primary residence is also rude. There are other things that should be meanstested first...and medicare is the first place I would start.

Harquebus:

06 May 2014 7:16:09am

Nothing can be done to save super savings. Declining crude oil production means lower productivity. It's unavoidable. EROEI mates, EROEI.Super is being used to prop up the failed eggonomic model of perpetual growth. The stock market is way over priced and the bubble will soon burst. You won't hear that Ian Verrender.

Aunty Social:

06 May 2014 7:19:56am

At last! While the talk of doctor co-payments, pension age increases, a deficit tax - or deficit levy depending on your political stripe regardless of the fact it would be collected by, and paid to the Australian Taxation Office - the need to overhaul the taxation system after having ignored the Henry Revue, and several other ludicrous, draconian measures that will do little to actually improve the budget bottom line, which while supposedly in crisis is healthy enough for the government to be able to roll out more of the Liberal specialty that is the oxymoron "middle class welfare" in the form of a gold plated parental leave scheme, at last someone mentions the Sacred Cow that is superannuation.

The system was supposed to enable people to fund their own retirement. Using the Treasurer's own figures the fact that so many people will be on a pension by 2020 is clear evidence that the super system is simply not working.

Treasury has also made it clear that the tipping point has almost been reached in that total age pension payments will soon be exceeded by the generous taxation concessions given to wealthy superannuants.

But to reform super would greatly displease the big four banks which have a huge pool of money to tantalise overseas investors with. It would be a brave politician who would want to interfere with their profit making.

The banks are wll aware that we don't have any brave politicians, so the Australian Taxation Office is obliged to give taxation concessions on purchases such as that of the 1817 first issue Bank of NSW 10 Shilling note that went under the hammer recently for $334,000. The note was bought by a private investor for his super account. Good luck to him, but it wrankles a bit to hear the Commission Of Audit, which didn't mention superannuation, suggest the inclusion of the family home in means testing for the age pension when taxation concessions to already wealthy superannuants will soon exceed the total amount paid in aged pension payments.

johne:

06 May 2014 8:21:24am

I may be missing something here BUT,To reduce the load on long term pension funded by Government Super savings need to increase NOT decrease over time. Various Governments have reduced the quantum of tax benefit from super contributions so now it is NOT attractive to save "a lot" in Super while earning( 25-35, 000 max) . Other means are overall more effective at savings while working and paying income tax. (Like negative gearing property. ) Reducing tax benefits on super contributions will make the pension problem worse over time. John e

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